REGISTRATION NO. 333-80105
CIK# 910952
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
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 83
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
E. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date
of the Registration Statement.
_
|X| Check box if it is proposed that this filing will become effective at
2:00 P.M. on June 23, 1999 pursuant to paragraph (b) of Rule 487.
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The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
RANSON UNIT INVESTMENT TRUSTS, SERIES 83
GNMA PORTFOLIO, SERIES 12
U.S. TREASURY PORTFOLIO, SERIES 21
GNMA PORTFOLIO, SERIES 12 seeks to provide current income and principal payments
while also preserving capital. This trust invests in a portfolio of mortgage-
backed securities. All payments of principal and interest on these securities
are guaranteed by the Government National Mortgage Association (GNMA).
U.S. TREASURY PORTFOLIO, SERIES 21 seeks to provide income while also preserving
capital. This trust invests in a portfolio of U.S. Treasury securities. The
full faith and credit of the United States government backs these securities.
Units are not deposits or obligations of any bank
or government agency and are not guaranteed.
You should read this prospectus and retain it for future reference.
June 23, 1999
The Securities and Exchange Commission has not approved
or disapproved of the Units or passed upon the adequacy of this prospectus.
Any contrary representation is a criminal offense.
<PAGE>
<TABLE>
<CAPTION>
RANSON UNIT INVESTMENT TRUSTS, SERIES 83
ESSENTIAL INFORMATION
AS OF THE OPENING OF BUSINESS ON THE INITIAL DATE OF DEPOSIT
SPONSOR AND EVALUATOR: RANSON & ASSOCIATES, INC.
TRUSTEE: THE BANK OF NEW YORK
GNMA U.S. Treasury
Portfolio Portfolio
Series 12 Series 21
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<S> <C> <C>
Cusip 753269141 753269158
Public Offering Price per Unit (1)(2) $ 10.080 $ 10.074
Principal Amount of Securities per Unit $ 10.000 $ 10.000
Estimated Current Return based on Public Offering Price (3)(4)(5) 6.77% 5.56%
Estimated Long-Term Return (3)(4)(5) 6.50% 5.48%
Principal Amount of Securities $ 160,000 $ 500,000
Number of Units 16,000 50,000
Fractional Undivided Interest per Unit 1/16,000 1/50,000
Calculation of Public Offering Price:
Aggregate Offering Price of Securities $ 154,919 $ 493,887
Aggregate Offering Price of Securities per Unit $ 9.682 $ 9.878
Plus Sales Charge per Unit (6) $ .399 $ .196
Public Offering Price per Unit (1)(2) $ 10.081 $ 10.074
Redemption Price per Unit $ 9.682 $ 9.878
Calculation of Estimated Net Annual Interest Income per Unit(11):
Estimated Annual Interest 6.97% $ .58875
Less: Estimated Annual Expense .20% $ .02830
Estimated Net Annual Interest Income 6.77% $ .56045
Estimated Daily Rate of Net Interest Accrual per Unit - $ .00156
Type of GNMA Securities Long Term -
Estimated Average Life of GNMA Securities 8.2 yrs. -
Minimum Principal Value of the Trust under which
Trust Agreement may be terminated (7) 40% $ 200,000
</TABLE>
Evaluations for purposes of sale, purchase or redemption of Units are made as of
the close of business of the Sponsor (currently 3:15 p.m. Central Time) (the
"Evaluation Time") next following receipt of an order for a sale or purchase of
Units or receipt by the Trustee of Units tendered for redemption.
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<TABLE>
<CAPTION>
ESSENTIAL INFORMATION-(CONTINUED)
GNMA U.S. Treasury
Portfolio Portfolio
Series 12 Series 21
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<S> <C> <C>
Trustee's Annual Fee per $1,000 principal amount of Securities (8) $ .86 $ 1.28
Estimated Annual Organizational Expenses per Unit (10) $ .005 $ .010
Interest Payments (9):
First Payment per Unit, representing 3 days $ .00568 $ .00467
Estimated Normal Monthly Distribution per Unit - $ .04670
Estimated Normal Annual Distribution per Unit - $ .56045
Sales Charge (6):
As a percentage of Public Offering Price per Unit 3.950% 1.950%
As a percentage of net amount invested 4.108% 1.984%
<S> <S>
Date of Trust Agreement June 23, 1999
First Settlement Date June 28, 1999
Mandatory Termination Date July 1, 2032
Evaluator's Annual Evaluation Fee-
GNMA Portfolio Maximum of $.20 per $1,000 Principal Amount of Securities
Sponsor's Annual Surveillance Fee-
GNMA Portfolio Maximum of $0.25 per $1,000 Principal Amount of Securities
Evaluator's Annual Evaluation Fee-
U.S. Treasury Portfolio Maximum of $0.10 per $1,000 Principal Amount of Securities
Sponsor's Annual Surveillance Fee-
U.S. Treasury Portfolio Maximum of $0.15 per $1,000 Principal Amount of Securities
</TABLE>
(1)Anyone ordering Units for settlement after the First Settlement Date will
pay accrued interest from such date to the date of settlement (normally three
business days after order) less distributions from the Interest Account
subsequent to the First Settlement Date. For purchases settling on the First
Settlement Date, no accrued interest will be added to the Public Offering
Price.
(2)Many unit investment trusts issue a number of units such that each unit
represents approximately $1,000 principal amount of underlying securities.
The Sponsor, on the other hand, in determining the number of Units for each
Trust has elected not to follow this format but rather to provide that number
of Units which will establish as close as possible as of the Initial Date of
Deposit a Principal Amount of Securities per Unit of $10.
(3)The Estimated Current Return and Estimated Long-Term Return are increased
for transactions entitled to a reduced sales charge.
(4)The Estimated Current Returns are calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The estimated
net annual interest income per Unit will vary with changes in fees and
expenses of the Trustee, the Sponsor and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities while the
Public Offering Price will vary with changes in the offering price of the
underlying Securities and with changes in the accrued interest; therefore,
there is no assurance that the present Estimated Current Returns indicated
above will be realized in the future. The Estimated Long-Term Returns are
calculated using a formula which (1) takes into consideration, and determines
and factors in the relative weightings of, the market values, yields (which
takes into account the amortization of premiums and the accretion of
discounts) and estimated retirement dates of all of the Securities in the
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applicable Trust and (2) takes into account the expenses and sales charge
associated with each Trust Unit. Since the market values and estimated
retirement dates of the Securities and expenses of each Trust will change,
there is no assurance that the present Estimated Long-Term Returns as
indicated above will be realized in the future. The Estimated Current
Returns and Estimated Long-Term Returns are expected to differ because the
calculation of the Estimated Long-Term Returns reflects the estimated date
and amount of principal returned while the Estimated Current Return
calculations include only net annual interest income and Public Offering
Price.
(5)This figure is based on estimated per Unit cash flows. Estimated cash flows
will vary with changes in fees and expenses, with changes in current interest
rates and with the principal prepayment, redemption, maturity, call, exchange
or sale of the underlying Securities. The estimated cash flows to
Unitholders for the Trusts are either set forth under "Estimated Cash Flows
to Unitholders" for each Trust or are available upon request at no charge
from the Sponsor.
(6)Transactions subject to quantity discounts will have reduced sales charges,
thereby reducing all percentages in the table.
(7)The minimum principal value of each Trust (other than a Tax-Exempt
Portfolio) under which the Trust Agreement may be terminated is 40% of the
total aggregate principal amount of securities deposited in each such Trust
during the primary offering period. The minimum principal value of each Tax-
Exempt Portfolio under which the Trust Agreement may be terminated is 20% of
the initial aggregate principal amount of securities deposited in such Trust.
(8)See "General Information-Expenses of the Trusts."
(9)Unitholders will receive interest distributions monthly. The Record Date is
the first day of the month, commencing July 1, 1999, and the distribution
date is the fifteenth day of the month, commencing July 15, 1999.
(10)Each Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration
statement, the trust indenture and other closing documents, registering Units
with the Securities and Exchange Commission and states, the initial audit of
the portfolio and the initial fees and expenses of the Trustee, but not
including the expenses incurred in the preparation and printing of brochures
and other advertising materials and any other selling expenses) as is common
for mutual funds. It is intended that total organizational expenses will be
amortized over a five year period or the life of the related Trust if less
than five years. See "General Information-Expenses of the Trusts" and
"Statements of Financial Condition." Historically, the sponsors of unit
investment trusts have paid all the costs of establishing such trusts.
(11)Estimated annual interest amounts are expressed as percentages for the GNMA
Portfolios due to the prepayment risk associated with GNMA Securities. See
"The Trust Funds" and "General Information-Interest, Estimated Long-Term
Return and Estimated Current Return."
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THE TRUST FUNDS
Ranson Unit Investment Trusts, Series 83 includes the following separate unit
investment trusts created by the Sponsor under the name Ranson Unit Investment
Trusts: "GNMA Portfolio, Series 12" and "U.S. Treasury Portfolio, Series 21".
Each of the Trust Funds is separate and is designated by a different series
number. Each of the Trust Funds was created under the laws of the State of New
York pursuant to a trust indenture dated the Initial Date of Deposit (the "Trust
Agreements") between Ranson & Associates, Inc. (the "Sponsor" and "Evaluator")
and The Bank of New York (the "Trustee").*
The GNMA Portfolio was formed for the purpose of obtaining safety of capital and
current monthly distributions of interest and principal through investment in a
portfolio primarily consisting of mortgage-backed securities of the modified
pass-through type on which all payments of principal and interest are fully
guaranteed by the GNMA. The full faith and credit of the United States is
pledged to the payment of the Securities in the GNMA Portfolio but the Units
themselves are not backed by such full faith and credit.
The U.S. Treasury Portfolio was formed for the purpose of providing safety of
capital and investment flexibility through an investment in a portfolio of U.S.
Treasury Obligations that are backed by the full faith and credit of the United
States government. The U.S. Treasury Portfolio was also formed for the purpose
of providing protection against changes in interest rates and also passing
through to Unitholders in all states the exemption from state personal income
taxes afforded to direct owners of U.S. obligations. The value of the Units,
the estimated current return and the estimated long-term return to new
purchasers will fluctuate with the value of the Securities in the portfolio
which will generally decrease or increase inversely with changes in interest
rates.
There is, of course, no guarantee that the Trust Funds' objectives will be
achieved.
As used herein, the terms "Securities" and "Bonds" mean the obligations
initially deposited in the Trusts described under "Portfolio" for each Trust
(including all contracts to purchase such obligations accompanied by an
irrevocable letter of credit sufficient to perform such contracts initially
deposited in the Trusts) and any additional obligations deposited in the Trusts
following the Initial Date of Deposit. "Portfolio Obligations" means the
obligations (and contracts for the purchase thereof) included in the GNMA
Portfolio. As used herein, the term "U.S. Treasury Obligations" means the
obligations (and contracts) included in the U.S. Treasury Portfolio.
On the Initial Date of Deposit, the Sponsor delivered to the Trustee that
aggregate principal amount of Securities or contracts for the purchase thereof
for deposit in the Trust Funds as set forth under "Essential Information." Of
such principal amount, the amount specified in "Essential Information" was
deposited in each Trust. In exchange for the Securities so deposited, the
Trustee delivered to the Sponsor documentation evidencing the ownership of that
number of Units for each Trust as indicated under "Essential Information." Each
Trust initially consists of delivery statements (i.e., contracts) to purchase
obligations. The Sponsor has a limited right of substitution for such
Securities in the event of a failed contract. See "General Information-Trust
Information."
Additional Units of each Trust may be issued from time to time following the
Initial Date of Deposit by depositing in the Trust additional Securities (or
contracts for the purchase thereof together with cash or irrevocable letters of
credit) or cash (including a letter of credit) with instructions to purchase
additional Securities. As additional Units are issued by a Trust as a result of
the deposit of additional Securities by the Sponsor, the aggregate value of the
- --------------------
* Reference is made to the Trust Agreements, and any statements contained herein
are qualified in their entirety by the provisions of the Trust Agreements.
5
<PAGE>
Securities in the Trust will be increased and the fractional undivided interest
in the Trust represented by each Unit will be decreased. The Sponsor may
continue to make additional deposits of Securities into a Trust following the
Initial Date of Deposit, provided that such additional deposits will be in
principal amounts which will maintain the same original percentage relationship
among the principal amounts of the Securities in such Trust established by the
initial deposit of the Securities. Thus, although additional Units will be
issued, each Unit will continue to represent the same principal amount of each
Security, and the percentage relationship among the principal amount of each
Security in the related Trust will remain the same. If the Sponsor deposits
cash to purchase additional Securities exiting and new investors may experience
a dilution of their investments and a reduction in their anticipated income
because of fluctuations in the prices of the Securities between the time of the
cash deposit and the purchase of the Securities and because the Trust will pay
any associated brokerage fees. To minimize this effect, the Trust will attempt
to purchase the Securities as close to the evaluation time or as close to the
evaluation prices as possible.
Each Unit initially offered represents that undivided interest in the
appropriate Trust indicated under "Essential Information." To the extent that
any Units are redeemed by the Trustee or additional Units are issued as a result
of additional Securities being deposited by the Sponsor, the fractional
undivided interest in a Trust represented by each unredeemed Unit will increase
or decrease accordingly, although the actual interest in such Trust represented
by such fraction will remain unchanged. Units will remain outstanding until
redeemed upon tender to the Trustee by Unitholders, which may include the
Sponsor, or until the termination of the Trust Agreement.
An investment in Units of a Trust Fund should be made with an understanding of
the risks which an investment in fixed rate debt obligations may entail,
including the risk that the value of the portfolio and hence of the Units will
decline with increases in interest rates. The value of the underlying
Securities will fluctuate inversely with changes in interest rates. The
uncertain economic conditions of recent years, together with the fiscal measures
adopted to attempt to deal with them, have resulted in wide fluctuations in
interest rates and, thus, in the value of fixed rate debt obligations generally
and long-term obligations in particular. The Sponsor cannot predict the degree
to which such fluctuations will continue in the future.
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<PAGE>
THE GNMA PORTFOLIO
THE TRUST PORTFOLIO
The purpose and objective of GNMA Portfolio Series 12 is to provide investors
with an appropriate vehicle to obtain safety of capital and monthly
distributions of interest and principal through investment in a fixed portfolio
primarily consisting of Ginnie Maes backed by the full faith and credit of the
United States.
In selecting Securities for deposit in the GNMA Portfolio, the Sponsor
considered the following factors, among others: (i) the types of such
obligations available; (ii) the prices and yields of such obligations relative
to other comparable obligations, including the extent to which such obligations
are traded at a premium or at a discount from par; and (iii) the maturities of
such obligations.
Because regular payments of principal are to be received and certain of the
Securities from time to time may be redeemed or will mature in accordance with
their terms or may be sold under certain circumstances described herein, the
Trust might not retain its present size and composition.
<TABLE>
<CAPTION>
GNMA PORTFOLIO SERIES 12 PORTFOLIO
AS OF THE INITIAL DATE OF DEPOSIT: JUNE 23, 1999
Government National Mortgage Association, Modified Pass-Through
Mortgage-Backed Securities*
Range of Cost of
Face Stated Securities
Amount Issuer Coupon Maturities(1) to Trust(2)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$150,000 Government National Mortgage Association 7.50% 2029 to 2031 $151,922
10,000 U.S. Treasury Strip (3) 0.00% May 15, 2018 2,997
- -------- --------
$160,000 $154,919
======== ========
<FN>
- --------------------
See "Notes to Portfolio."
NOTES TO PORTFOLIO
(1) The principal amount of Securities listed as having the range of maturities
shown is an aggregate of individual Securities having varying ranges of
maturities within that shown. They are listed as one category of Securities
with a single range of maturities because of current market conditions that
accord no difference in price among the Securities grouped together on the
basis of the difference in their maturity ranges. At some time in the
future, however, the difference in maturity ranges could affect the market
value of the individual Securities.
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<PAGE>
(2) Some Securities may be represented by contracts to purchase such Securities.
During the initial offering period, evaluations of Securities are made on
the basis of current offering side evaluations of the Securities. The
aggregate offering price is greater than the aggregate bid price of the
Securities, which is the basis on which Redemption Prices will be
determined for purposes of redemption of Units after the initial offering
period. Other information regarding the Securities in the Trusts, at the
opening of business on the Initial Date of Deposit, is as follows:
GNMA
Portfolio
Series 12
---------
Cost of Securities to Sponsor $ 154,359
Profit or (Loss) to Sponsor $ 560
Annual Interest Income to Trust $ 11,250
Bid Side Value of Securities $ 154,731
(3) This Security has been purchased at a deep discount from the par value
because there is little or no stated interest income thereon. Securities
which pay no interest are normally described as "zero coupon" Securities.
Over the life of Securities purchased at a deep discount the value of such
Securities will increase such that upon maturity the holders of such
securities will receive 100% of the principal amount thereof.
* In addition to the information as to the GNMA modified pass-through
mortgage-backed Securities set forth under "Portfolios," the Trustee will
furnish Unitholders a statement listing the name of issuer, pool number,
interest rate, maturity date and principal amount for each such Security
in the portfolio upon written request.
</TABLE>
GNMA SECURITIES
The Trust is a unit investment trust whose objectives are to obtain safety of
capital and to provide current monthly distributions of interest and principal
through investment in a fixed portfolio initially consisting primarily of
contracts to purchase taxable mortgage-backed securities of the modified pass-
through type, including so-called "Ginnie Mae II's," which involve larger pools
of mortgages and which have a central paying agent, fully guaranteed as to
principal and interest by the Government National Mortgage Association ("GNMA").
All of the Ginnie Maes consist of pools of long term mortgages on 1- to 4-family
dwellings. Your Trust may also include zero coupon U.S. Treasury Obligations.
An investment in Units of a Trust should be made with an understanding of an
investment in fixed rate long term debt obligations, including the risk that the
value of the portfolio and hence of the Units will decline with increases in
interest rates. The value of the underlying Securities will fluctuate inversely
with changes in interest rates. In addition, the potential for appreciation of
the underlying Securities, which might otherwise be expected to occur as a
result of a decline in interest rates, may be limited or negated by increased
principal prepayments in respect of the underlying mortgages. The high
inflation of prior years, together with the fiscal measures adopted to attempt
to deal with it, have resulted in wide fluctuations in interest rates and, thus,
in the value of fixed rate long term debt obligations generally. The Sponsor
cannot predict whether such fluctuations will continue in the future.
The Securities were chosen in part on the basis of their respective stated
maturity dates. The ranges of maturity dates of each of the Securities are
shown on the "Portfolio." The stated mandatory termination date of the GNMA
Portfolio
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is set forth under "Essential Information. Your Trust may be appropriate for
investors who desire to participate in a portfolio of taxable fixed income
securities offering the safety of capital provided by securities backed by the
full faith and credit of the United States but who do not wish to invest the
minimum amount which is required for a direct investment in GNMA guaranteed
securities.
Each group of Ginnie Maes described herein as having a specified range of
maturities includes individual mortgage-backed securities which have varying
ranges of maturities within each range specified under "Essential Information."
Each such group of Ginnie Maes is described as one category of securities
because current market conditions accord no difference in price among the
individual Ginnie Mae securities within such group on the basis of the
difference in the maturity dates of each Ginnie Mae. As long as this market
condition prevails, a purchase of Ginnie Maes with the same coupon rate and a
maturity date within the range mentioned above will be considered an acquisition
of the same Security. In the future, however, the difference in maturity ranges
could affect the market value of the individual Ginnie Maes. At such time, any
additional purchases by your Trust will take into account the maturities of the
individual Securities.
The mortgages underlying a Ginnie Mae may be prepaid at any time without
penalty. A lower or higher return on Units may occur depending on whether the
price at which the respective Ginnie Maes were acquired by your Trust is lower
or higher than par (which represents the price at which such Ginnie Maes will be
redeemed upon prepayment). Redemption of premium Ginnie Maes at par pursuant to
prepayments of mortgages will operate to lower the current return on Units of
such Series outstanding at that time since premium Ginnie Maes normally carry
higher interest coupons than par or discount Ginnie Maes. If mortgage rates
decline in the future, such prepayments may occur with increasing frequency
because, among other reasons, mortgagors may be able to refinance their
outstanding mortgages at lower interest rates.
Set forth below is a brief description of the current method of origination of
Ginnie Maes; the nature of such securities, including the guaranty of GNMA; the
basis of selection and acquisition of the Ginnie Maes; and the expected life of
the Ginnie Maes and of the Trust. The "Portfolio" contains information
concerning the coupon rate and range of stated maturities of the Ginnie Maes.
Origination. The Ginnie Maes are backed by the indebtedness secured by
underlying mortgage pools of long-term mortgages on 1- to 4-family dwellings.
The pool of mortgages which is to underlie a particular new issue of Ginnie Maes
is assembled by the proposed issuer of such Ginnie Maes. The issuer is
typically a mortgage banking firm, and in every instance must be a mortgagee
approved by and in good standing with the Federal Housing Administration
("FHA"). In addition, GNMA imposes its own criteria on the eligibility of
issuers, including a net worth requirement.
The mortgages which are to comprise a new Ginnie Mae pool may have been
originated by the issuer itself in its capacity as a mortgage lender or may be
acquired by the issuer from a third party. Such third party may be another
mortgage banker, a banking institution, the Veterans Administration ("VA")
(which in certain instances acts as a direct lender and thus originates its own
mortgages) or one of several governmental agencies. All mortgages in any given
pool will be insured under the National Housing Act, as amended ("FHA-insured")
or Title V of the Housing Act of 1949 ("FMHA-insured") or guaranteed under the
Servicemen's Readjustment Act of 1944, as amended, or Chapter 37 of Title 38,
U.S.C. ("VA guaranteed"). Such mortgages will have a date for the first
scheduled monthly payment of principal that is not more than one year prior to
the date on which GNMA issues its guaranty commitment as described below, will
have comparable interest rates and maturity dates, and will meet additional
criteria of GNMA. All mortgages in the pools backing the Ginnie Maes are
mortgages on 1- to 4-family dwellings. In general, the mortgages in these pools
provide for monthly payments over the life of the mortgage (aside from
prepayments) designed to repay the principal of the mortgage over such period,
together with interest at the fixed rate of the unpaid balance.
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To obtain GNMA approval of a new pool of mortgages, the issuer will file with
GNMA an application containing information concerning itself, describing
generally the pooled mortgages, and requesting that GNMA approve the issue and
issue its commitment (subject to GNMA's satisfaction with the mortgage documents
and other relevant documentation) to guarantee the timely payment of principal
of and interest on the Ginnie Maes to be issued by the issuer. If the
application is in order, GNMA will issue its commitment and will assign a GNMA
pool number to the pool. Upon completion of the required documentation
(including detained information as to the underlying mortgages, a custodial
agreement with a Federal or state regulated financial institution satisfactory
to GNMA pursuant to which the underlying mortgages will be held in safekeeping,
and a detailed guaranty agreement between GNMA and the issuer) the issuance of
the Ginnie Maes is permitted. When the Ginnie Maes are issued, GNMA will
endorse its guaranty thereon. The aggregate principal amount of Ginnie Maes
issued will be equal to the then aggregate unpaid principal balances of the
pooled mortgages. The interest rate borne by the Ginnie Maes is currently fixed
at 1/2 of 1% below the interest rate of the Pooled 1 - to 4-family mortgages,
the differential being applied to the payment of servicing and custodial charges
as well as GNMA's guaranty fee.
Ginnie Mae II's consist of jumbo pools of mortgages consisting of pools of
mortgages from more than one issuer. The major advantage of Ginnie Mae II's
lies in the fact that a central paying agent sends one check to the holder on
the required payment date. This greatly simplifies the current procedure of
collecting distributions from each issuer of a Ginnie Mae, since such
distributions are often received late.
Nature of Ginnie Maes and GNMA Guaranty. All of the Ginnie Maes, including the
Ginnie Mae II's, are of the "modified pass-through" type, i.e., they provide for
timely monthly payments to the registered holders thereof of a pro rata share of
the scheduled principal payments on the underlying mortgages, whether or not
collected by the issuers. Such monthly payments will also include, on a pro
rata basis, any prepayments of principal of such mortgages received and interest
(net of the servicing and other charges described above) on the aggregate unpaid
principal balance of such Ginnie Maes, whether or not the interest on the
underlying mortgages has been collected by the issuers.
The Ginnie Maes are guaranteed as to timely payment of principal and interest by
GNMA. Funds received by the issuers on account of the mortgages backing the
Ginnie Maes are intended to be sufficient to make the required payments of
principal of and interest on such Ginnie Maes but, if such funds are
insufficient for that purpose, the guaranty agreements between the issuers and
GNMA require the issuers to make advances sufficient for such payments. If the
issuers fail to make such payments, GNMA will do so.
GNMA is authorized by Section 306(g) of Title III of the National Housing Act to
guarantee the timely payment of principal of and interest on securities which
are based on or backed by a trust for pool composed of mortgages insured by FHA,
the Farmers' Home Administration ("FMHA") or guaranteed by the VA. Section
306(g) provides further that the full faith and credit of the United States is
pledged to the payment of all amounts which may be required to be paid under any
guaranty under such subsection. An opinion of an Assistant Attorney General of
the United States, dated December 9, 1969, states that such guaranties
"constitute general obligations of the United States backed by its full faith
and credit."* GNMA is empowered to borrow from the United States Treasury to
the extent necessary to make any payments of principal and interest required
under such guaranties. Ginnie Maes are backed by the aggregate indebtedness
secured by the underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages
and, except to the extent of funds received by the issuers on account of such
mortgages, Ginnie Maes do not constitute a liability of nor evidence any
recourse against such issuers, but recourse thereon is solely against GNMA.
Holders of Ginnie Maes (such as the Trusts) have no security interest in or lien
on the underlying mortgages.
- --------------------
* Any statement in this Prospectus that a particular Security is backed by the
full faith and credit of the United States is based upon the opinion of an
Assistant Attorney General of the United States and should be so construed.
10
<PAGE>
The GNMA guaranties referred to herein relate only to payment of principal of
and interest on the Ginnie Maes in the portfolio and not the Units offered
hereby.
Life of the Securities and of the Trust. Monthly payments of principal will be
made, and additional prepayments of principal may be made, to the Trust in
respect of the mortgages underlying the Ginnie Maes in your Trust. All of the
mortgages in the pools relating to the Ginnie Maes are subject to prepayment
without any significant premium or penalty at the option of the mortgagors. It
has been the experience of the mortgage industry that the average life of
mortgages comparable to those contained in your Trust, owing to prepayments,
refinancings and payments from foreclosures is considerably less than the stated
maturity set forth in "Essential Information."
In the mid 1970's, published tables for Ginnie Maes utilized a 12 year average
life assumption for Ginnie Mae pools of 26-30 year mortgages on 1- to 4-family
dwellings. This assumption was derived from the FHA experience relating to
prepayments on such mortgages during the period from the mid 1950's to the mid
1970's. This 12 year average life assumption was calculated in respect of a
period during which mortgage lending rates were fairly stable. That assumption
is probably no longer an accurate measure of the life of Ginnie Maes or their
underlying single family mortgage pools. However, yield tables may still
utilize the 12 year average life assumption and Ginnie Maes may continue to be
traded based on this assumption. Recently it has been observed that mortgages
issued at high interest rates have experienced accelerated prepayment rates
which would indicate a shorter average life than 12 years.
A number of factors, including homeowner's mobility, change in family size and
mortgage market interest rates will affect the average life of the Ginnie Maes.
For example, Ginnie Maes issued during a period of high interest rates will be
backed by a pool of mortgage loans bearing similarly high rates. In general,
during a period of declining interest rates, new mortgage loans with interest
rates lower than those charged during periods of high rates will become
available. To the extent a homeowner has an outstanding mortgage with a high
rate, he may refinance his mortgage at a lower interest rate or he may rapidly
repay his old mortgage. Should this happen, a Ginnie Mae issued with a high
interest rate may experience a rapid prepayment of principal as the underlying
mortgage loans prepay in whole or in part. Accordingly, there can be no
assurance that the prepayment levels which will be actually realized will
conform to the experience of the FHA, other mortgage lenders or other Ginnie Mae
investors. It is not possible to meaningfully predict prepayment levels
regarding the Ginnie Maes. Therefore, the termination of your Trust might be
accelerated as a result of prepayments made as described herein.
FEDERAL TAX STATUS
In the opinion of Chapman and Cutler, counsel for the Sponsor, under existing
law:
Each Trust is an association taxable as a corporation under the Internal Revenue
Code of 1986, as amended (the Code') and intends to qualify on a continuous
basis for and elect tax treatment as a regulated investment company" under the
Code. If a Trust so qualifies and timely distributes to Unitholders 90% or more
of its taxable income (without regard to its net capital gain, i.e., the excess
of its net long-term capital gain over its net short-term capital loss), it will
not be subject to federal income tax on the portion of its taxable income
(including any net capital gain) that it distributes to Unitholders. In
addition, to the extent a Trust timely distributes to Unitholders at least 98%
of its taxable income (including any net capital gain), it will not be subject
to the 4% excise tax on certain undistributed income of "regulated investment
companies." Each Trust intends to timely distribute its taxable income
(including any net capital gains) to avoid the imposition of federal income tax
or the excise tax. Distributions of the entire net investment income of each
Trust are required by the Indenture.
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<PAGE>
Each Trust intends to file its federal income tax return on a calendar year
basis. In any taxable year of a Trust, the distributions of its income, other
than distributions which are designated as capital gains dividends, will, to the
extent of the earnings and profits of such Trust, constitute dividends for
Federal income tax purposes which are taxable as ordinary income to Unitholders.
To the extent that the distributions to a Unitholder in any year exceed a
Trust's current and accumulated earnings and profits, they will be treated as a
return of capital and will reduce the Unitholder's basis in his Units, and to
the extent that they exceed his basis, will be treated as a gain from the sale
of his Units as discussed below. Distributions from each Trust will not be
eligible for the 70% dividends received deduction for corporations. Although
distributions generally will be treated as distributed when paid, distributions
declared in October, November or December, payable to Unitholders of record on a
specified date in one of those months and paid during January of the following
year will be treated as having been distributed by each Trust (and received by
the Unitholders) on December 31 of the year such distributions are declared.
Under the Code, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses, will be
deductible by individuals only to the extent they exceed 2% of adjusted gross
income. Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by a Trust as long as the Units of
such Trust are held by or for 500 or more persons at all times during the
taxable year or another exception is met. In the event the Units of a Trust are
held by fewer than 500 persons, additional taxable income may be realized by the
individual Unitholders in excess of the distributions received from such Trust.
Distributions of a Trust's net capital gain which a Trust properly designates as
capital gain dividends will be taxable to Unitholders thereof as long-term
capital gains, regardless of the length of time the Units have been held by a
Unitholder. However, if a Unitholder receives a long-term capital gain dividend
(or is allocated to a portion of a Trust's undistributed long-term capital gain)
and sells his Units at a loss prior to holding them for 6 months, such loss will
be recharacterized as long-term capital loss to the extent of such long-term
capital gain received as a dividend or allocated to a Unitholder. Distributions
in partial liquidation, reflecting the proceeds of prepayments, redemptions,
maturities (including monthly mortgage payments of principal) or sales of
Securities from a Trust (exclusive of net capital gain) will not be taxable to
Unitholders of such Trust to the extent that they represent a return of capital
for tax purposes. The portion of distributions which represents a return of
capital will, however, reduce a Unitholder's basis in his Units, and to the
extent they exceed the basis of his Units will be taxable as a capital gain. A
Unitholder may recognize a taxable gain or loss when his Units are sold or
redeemed. Such gain or loss will generally constitute either a long-term or
short-term capital gain or loss depending upon the length of time the Unitholder
has held his Units. Any loss of Units held six months or less will be treated
as long-term capital loss to the extent of any long-term capital gains dividends
received (or deemed to have been received) by the Unitholder with respect to
such Units during the six-month period or less that the Unitholder owns the
Units. The Internal Revenue Service Restructuring and Reform Act of 1998 (the
"1998 Tax Act") provides that for taxpayers other than corporations, net capital
gain (which is defined as net long-term capital gain over net short-term capital
loss for the taxable year) realized from property (with certain exclusions) is
generally subject to a maximum marginal stated tax rate of 20% (10% in the case
of certain taxpayers in the lowest tax bracket). Capital gain or loss is long-
term if the holding period for the asset is more than one year, and is short-
term if the holding period for the asset is one year or less. The date on which
a Unit is acquired (i.e., the "trade date") is excluded for purposes for
determining the holding period of the Unit. The legislation is generally
effective retroactively for amounts properly taken into account on or after
January 1, 1998. Capital gains realized from assets held for one year or less
are taxed at the same rates as ordinary income.
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Note, however, that the 1998 Tax Act (and the Taxpayer Relief Act of 1997 (the
"1997 Act")) provide that the application of the rules described above in the
case of pass-through entities such as the Trusts will be prescribed in future
Treasury Regulations. The Internal Revenue Service has released preliminary
guidance which provides that, in general, pass-through entities such as the
Trusts may designate their capital gains dividends as either a 20% rate gain
distribution, an unrecaptured section 1250 gain distribution, or a 28% rate gain
distribution, depending on the nature of the gain received by the pass-through
entity. Unitholders should consult their own tax advisors as to the tax rate
applicable to capital gain dividends.
The 1997 Act includes other provisions that treat certain other transactions
designed to reduce or eliminate risk of loss and opportunities for gain (e.g.,
short sales, offsetting notional principal contracts, futures or forward
contracts or similar transactions) as constructive sales for purposes of
recognition of gain (but not loss) and for purposes of determining the holding
period. Unitholders should consult their own tax advisers with regard to any
such constructive sales rules.
In addition, it should be noted that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
"conversion transactions" effective for transactions entered into after April
30, 1993. Unitholders and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on their investment in
Units.
If a Ginnie Mae has been purchased by a Trust at a market discount (i.e., for a
purchase price less than its stated redemption price at maturity (or if issued
with original issue discount, its "revised issue price")) unless the amount of
market discount is "de minimis" as specified in the Code, each payment of
principal on the Ginnie Mae will generally constitute ordinary income to a Trust
to the extent of any accrued market discount unless a Trust elects to include
market discount in taxable income as it accrues. In the case of a Ginnie Mae,
the amount of market discount that is deemed to accrue each month shall
generally be the amount of discount that bears the same ratio to the total
amount of remaining market discount that the amount of interest paid during the
accrual period (each month) bears to the total amount of interest remaining to
be paid on the Ginnie Mae as of the beginning of the accrual period.
Each Unitholder of each Trust shall receive an annual statement describing the
tax status of the distributions paid by such Trust.
Each Unitholder will be requested to provide the Unitholder's taxpayer
identification number to the Trustee and to certify that the Unitholder has not
been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by a Trust to such
Unitholder (including amounts received upon the redemption of Units) will be
subject to back-up withholding.
A Unitholder who is a foreign investor (i.e., an investor other than a United
States citizen or resident or a United States corporation, partnership, estate
or trust) should be aware that, generally, subject to applicable tax treaties,
distributions from a Trust which constitute dividends for Federal income tax
purposes (other than dividends which a Trust designates as capital gain
dividends) will be subject to United States income taxes, including withholding
taxes. However, distributions received by a foreign investor from a Trust that
are designated by a Trust as capital gain dividends should not be subject to
United States Federal income taxes, including withholding taxes, if all of the
following conditions are met (i) the capital gain dividend is not effectively
connected with the conduct by the foreign
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<PAGE>
investor of a trade or business within the United States, (ii) the foreign
investor (if an individual) is not present in the United States for 183 days or
more during his or her taxable year, and (iii) the foreign investor provides all
certification which may be required of his status (foreign investors may contact
the Sponsor to obtain a Form W-8 which must be filed with the Trustee and
refiled every three years thereafter). Foreign investors should consult their
tax advisors with respect to United States tax consequences of ownership of
Units. Units in a Trust and Trust distributions may also be subject to state
and local taxation and Unitholders should consult their tax advisors in this
regard.
Distributions reinvested into additional Units of a Trust will be taxed to a
Unitholder in the manner described above (i.e., as ordinary income, long-term
capital gain or as a return of capital).
The foregoing discussion relates only to the federal income tax status of the
Trusts and to the tax treatment of distributions by the Trusts to United States
Unitholders.
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THE U.S. TREASURY PORTFOLIO SERIES
THE TRUST PORTFOLIO
U.S. Treasury Portfolio Series 21 was formed for the purpose of providing safety
of capital and investment flexibility through an investment in a portfolio of
U.S. Treasury Obligations that is backed by the full faith and credit of the
United States government. The U.S. Treasury Portfolio Series was also formed
for the purpose of providing protection against changes in interest rates and
also passing through to Unitholders in all states the exemption from state
personal income taxes afforded to direct owners of U.S. obligations. The value
of the Units, the estimated current return and estimated long-term return to new
purchasers will fluctuate with the value of the Securities included in a
portfolio which will generally increase or decrease inversely with changes in
interest rates.
The U.S. Treasury Portfolio Series may be an appropriate investment vehicle for
investors who desire to participate in a portfolio of taxable, fixed income
securities offering the safety of capital provided by an investment backed by
the full faith and credit of the United States. In addition, many investors may
benefit from the exemption from state and local personal income taxes that will
pass through the U.S. Treasury Portfolio Series to Unitholders in virtually all
states.
In selecting U.S. Treasury Obligations for deposit in the U.S. Treasury
Portfolio Series, the following factors, among others were, considered by the
Sponsor: (a) the types of such obligations available; (b) the prices and yields
of such obligations relative to other comparable obligations, including the
extent to which such obligations are traded at a premium or at a discount from
par; and (c) the maturities of such obligations.
U.S. TREASURY SECURITIES
The Securities are direct obligations of the United States and are backed by its
full faith and credit although the Units are not so backed. The Securities are
not rated but in the opinion of the Sponsor have credit characteristics
comparable to those of securities rated "AAA" by nationally recognized rating
agencies.
An investment in Units should be made with an understanding of an investment in
fixed rate debt obligations may entail, including the risk that the value of the
Securities and hence the Units will decline with increases in interest rates.
The high inflation of past years, together with the fiscal measures adopted to
attempt to deal with it, have resulted in wide fluctuations in interest rates
and, thus, in the value of fixed rate debt obligations generally. The Sponsor
cannot predict whether such fluctuations will continue in the future. For a
discussion of other considerations associated with an investment in Units, see
"General Information-Trust Information."
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<TABLE>
<CAPTION>
RANSON UNIT INVESTMENT TRUST, SERIES 83
U.S. TREASURY PORTFOLIO, SERIES 21
PORTFOLIO AS OF THE INITIAL DATE OF DEPOSIT: JUNE 23, 1999
Cost of
Face Securities
Amount Description Coupon Maturities to Trust(1)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 100,000 U.S. Treasury Note 7.250% 5/15/2004 $ 105,516
100,000 U.S. Treasury Note 6.500% 5/15/2005 102,484
50,000 U.S. Treasury Note 6.875% 5/15/2006 52,289
50,000 (2) U.S. Treasury Strip 0.000% 5/15/2006 33,019
100,000 U.S. Treasury Note 6.625% 5/15/2007 103,438
100,000 U.S. Treasury Note 5.625% 5/15/2008 97,141
- --------- ---------
$ 500,000 $ 493,887
========= =========
<FN>
- --------------------
See "Notes to Portfolio."
NOTES TO PORTFOLIO:
(1) Some Securities may be represented by contracts to purchase such Securities.
During the initial offering period, evaluations of Securities are made on
the basis of current offering side evaluations of the Securities. The
aggregate offering price is greater than the aggregate bid price of the
Securities, which is the basis on which Redemption Prices will be
determined for purposes of redemption of Units after the initial offering
period. Other information regarding the Securities at the opening of
business on the Initial Date of Deposit, is as follows:
U.S.
Treasury
Series 21
---------
Cost of Securities to Sponsor $ 493,868
Profit or (Loss) to Sponsor $ 19
Annual Interest Income to Trust $ 29,438
Bid Side Value of Securities $ 493,604
(2) This Security has been purchased at a deep discount from the par value
because there is little or no stated interest income thereon. Securities
which pay no interest are normally described as "zero coupon" Securities.
Over the life of Securities purchased at a deep discount the value of such
Securities will increase such that upon maturity the holders of such
securities will receive 100% of the principal amount thereof.
</TABLE>
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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.
In the opinion of Chapman and Cutler, counsel for the Sponsor, under existing
law:
(1)Each Trust is not an association taxable as a corporation for Federal income
tax purposes and each Unitholder will be treated as the owner of a pro rata
portion of such Trust under the Internal Revenue Code of 1986, as amended
(the "Code") and income of such Trust will be treated as the income of the
Unitholders under the Code. Each Unitholder will be considered to have
received his or her pro rata share of income derived from each Trust asset
when such income is considered to be received by the Trust.
(2)Each Unitholder will have a taxable event when a Trust disposes of a U.S.
Treasury Obligation, or when the Unitholder redeems or sells his Units.
Unitholders must reduce the tax basis of their Units for their share of
accrued interest received by a Trust, if any, on U.S. Treasury Obligations
delivered after the Unitholders pay for their Units to the extent that such
interest accrued on such U.S. Treasury Obligations before the date the Trust
acquired ownership of the U.S. Treasury Obligations (and the amount of this
reduction may exceed the amount of accrued interest paid to the seller) and,
consequently, such Unitholders may have an increase in taxable gain or
reduction in capital loss upon the disposition of such Units. Unitholders
should consult their own tax advisors with regard to calculation of basis.
Gain or loss upon the sale or redemption of Units is measured by comparing
the proceeds of such sale or redemption with the adjusted basis of the Units.
If the Trustee disposes of U.S. Treasury Obligations (whether by sale,
payment on maturity, redemption or otherwise), gain or loss is recognized to
the Unitholder (subject to the various nonrecognition provisions of the
Code). The amount of any such gain or loss is measured by comparing the
Unitholder's pro rata share of the total proceeds from such disposition with
the Unitholder's basis for his or her fractional interest in the asset
disposed of. In the case of a Unitholder who purchases Units, such basis
(before adjustment for earned original issue discount, amortized bond premium
and accrued market discount (if the Unitholder has elected to include such
market discount in income as it accrues), if any) is determined by
apportioning the cost of the Units among each of a Trust assets ratably
according to value as of the valuation date nearest the date of acquisition
of the Units. The tax basis reduction requirements of the Code relating to
amortization of bond premium may, under some circumstances, result in the
Unitholder realizing a taxable gain when his Units are sold or redeemed for
an amount equal to or less than his original cost.
(3)The basis of each Unit and of each U.S. Treasury Obligation which was issued
with original issue discount must be increased by the amount of accrued
original issue discount and the basis of each Unit and of each U.S. Treasury
Obligation which was purchased by a Trust at a premium must be reduced by the
annual amortization of bond premium which the Unitholder has properly elected
to amortize under Section 171 of the Code. Certain Trusts may contain "zero
coupon" Stripped Treasury Securities. The Stripped Treasury Securities held
by a Trust are treated as bonds that were originally issued at an original
issue discount as of the date a Unitholder purchases a Unit. Because the
Stripped Treasury Securities represent interests in "stripped" U.S. Treasury
bonds, a Unitholder's initial tax basis for his pro rata portion of each
Stripped Treasury Security held by a Trust (determined at the time he
acquires his Units, in the manner described above) will be treated as its
"purchase
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<PAGE>
price" by the Unitholder. Original issue discount is effectively treated
as interest for Federal income tax purposes, and the amount of original issue
discount in this case is generally the difference between the bond's purchase
price and its stated redemption price at maturity. A Unitholder will be
required to include in gross income for each taxable year the sum of his
daily portions of original issue discount attributable to the Stripped
Treasury Securities held by a Trust as such original issue discount accrues
and will, in general, be subject to Federal income tax with respect to the
total amount of such original issue discount that accrues for such year even
though the income is not distributed to the Unitholders during such year to
the extent it is not less than a "de minimis" amount as determined under the
Regulation relating to stripped bonds. To the extent the amount of such
discount is less than the respective "de minimis" amount, such discount is
generally treated as zero. In general, original issue discount accrues daily
under a constant interest rate method which takes into account the semi-
annual compounding of accrued interest. In the case of the Stripped Treasury
Securities, this method will generally result in an increase amount of income
to the Unitholders each year. Unitholders should consult their tax advisers
regarding the Federal income tax consequences and accretion of original issue
discount.
(4)The Unitholder's aliquot share of the total proceeds received on the
disposition of, or principal paid with respect to, a U.S. Treasury Obligation
held by a Trust will constitute ordinary income (which will be treated as
interest income for most purposes) to the extent it does not exceed the
accrued market discount on such U.S. Treasury Obligation that has not
previously been included in taxable income by such Unitholder. A Unitholder
may generally elect to include market discount in income as such discount
accrues. In general, market discount is the excess, if any, of the
Unitholder's pro rata portion of the outstanding principal balance of a U.S.
Treasury Obligation over the Unitholder's initial tax basis for such pro rata
portion, determined at the time such Unitholder acquires his Units. However,
market discount with respect to any U.S. Treasury Obligation will generally
be considered zero if it amounts to less than .025% of the obligation's
stated redemption price at maturity times the number of years to maturity.
The market discount rules do not apply to Stripped Treasury Securities
because they are stripped debt instruments subject to special original issue
discount rules as discussed above. If a Unitholder sells his Units, gain, if
any, will constitute ordinary income to the extent of the aggregate of the
accrued market discount on the Unitholder's pro rata portion of each U.S.
Treasury Obligation that is held by a Trust that has not previously been
included in taxable income by such Unitholder. In general, market discount
accrues on a ratable basis unless the Unitholder elects to accrue such
discount on a constant interest rate basis. However, a Unitholder should
consult his own tax adviser regarding the accrual of market discount. The
deduction by a Unitholder for any interest expense incurred to purchase or
carry Units will be reduced by the amount of any accrued market discount that
has not yet been included in taxable income by such Unitholder. In general,
the portion of any interest expense which is not currently deductible would
be ultimately deductible when the accrued market discount is included in
income. Unitholders should consult their own tax advisers regarding whether
an election should be made to include market discount in income as it accrues
and as to the amount of interest expense which may be currently deductible.
(5)The Code provides that "miscellaneous itemized deductions" are allowable only
to the extent that they exceed two percent of an individual taxpayer's
adjusted gross income. Miscellaneous itemized deductions subject to this
limitation under present law include a Unitholder's pro rata share of
expenses paid by a Trust, including fees of the Trustee and the Evaluator but
does not include amortizable bond premium on U.S. Treasury Obligations held
by a Trust.
The market discount rules do not apply to stripped Treasury Securities because
they are stripped debt instruments subject to special original issue discount
rules. Unitholders should consult their tax advisers as to the amount of
original issue discount which accrues.
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<PAGE>
If a Unitholder does not elect to annually include accrued market discount in
taxable income as it accrues, deduction for any interest expense incurred by the
Unitholder which is incurred to purchase or carry his Units will be reduced by
such accrued market discount. In general, the portion of any interest expense
which was not currently deductible would ultimately be deductible when the
accrued market discount is included in income. Unitholders should consult their
tax advisers regarding whether an election should be made to include market
discount in income as it accrues and as to the amount of interest expense which
may not be currently deductible.
The tax basis of a Unitholder with respect to his interest in a U.S. Treasury
Obligation is increased by the amount of original issue discount (and market
discount, if the Unitholder elects to include market discount, if any, on the
U.S. Treasury Obligations held by a Trust in income as it accrues) thereon
properly included in the Unitholder's gross income as determined for Federal
income tax purposes and reduced by the amount of any amortized acquisition
premium which the Unitholder has properly elected to amortize under Section 171
of the Code. A Unitholder's tax basis in his Units will equal his tax basis in
his pro rata portion of all of the assets of the Trust.
A Unitholder will recognize capital gain (or loss) when all or part of his pro
rata interest in a U.S. Treasury Obligation is disposed of in a taxable
transaction for an amount greater (or less) than his tax basis thereof. Any
gain recognized on a sale or exchange and not constituting a realization of
accrued "market discount," and any loss will, under current law, generally be
capital gain or loss except in the case of a dealer or financial institution.
As previously discussed, gain realized on the disposition of the interest of a
Unitholder in any U.S. Treasury Obligation deemed to have been acquired with
market discount will be treated as ordinary income to the extent the gain does
not exceed the amount of accrued market discount not previously taken into
income. Any capital gain or loss arising from the disposition of a U.S.
Treasury Obligation by the Trust or the disposition of Units by a Unitholder
will be short-term capital gain or loss unless the Unitholder has held his Units
for more than one year in which case such capital gain or loss will be long-
term. The Internal Revenue Service Restructuring and Reform Act of 1998 (the
"1998 Tax Act") provides that for taxpayers other than corporations, net capital
gain (which is defined as net long-term capital gain over net short-term capital
loss for the taxable year) realized from property (with certain exclusions) is
subject to a maximum marginal stated tax rate of 20% (10% in the case of certain
taxpayers in the lowest tax bracket). Capital gain or loss is long-term if the
holding period for the asset is more than one year, and is short-term if the
holding period for the asset is one year or less. The date on which a Unit is
acquired (i.e., the "trade date") is excluded for purposes for determining the
holding period of the Unit. The legislation is generally effective
retroactively for amounts properly taken into account on or after January 1,
1998. Capital gains realized from assets held for one year or less are taxed at
the same rates as ordinary income.
The tax basis reduction requirements of the Code relating to amortization of
bond premium may under some circumstances, result in the Unitholder realizing
taxable gain when his Units are sold or redeemed for an amount equal to or less
than his original cost.
If a Unitholder disposes of a Unit, he is deemed thereby to have disposed of his
entire pro rata interest in all Trust assets including his pro rata portion of
the U.S. Treasury Obligations represented by the Unit. This may result in a
portion of the gain, if any, on such sale being taxable as ordinary income under
the market discount rules (assuming no election was made by the Unitholder to
include market discount in income as it accrues) as previously discussed.
In addition, capital gains may be recharacterized as ordinary income in the case
of certain financial transactions that are "conversion transactions" effective
for transactions entered into after April 30, 1993. Unitholders and prospective
investors should consult with their tax advisers regarding the potential effect
of this provision on their investment in Units.
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<PAGE>
Certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) are treated as
constructive sales for purposes of recognition of gain (but not loss) and for
purposes of determining the holding period. Unitholders should consult their
own tax advisors with regard to any such constructive sales rules.
A Unitholder of a Trust who is not a citizen or resident of the United States or
a United States domestic corporation (a "Foreign Investor") will not be subject
to U.S. Federal income taxes, including withholding taxes on amounts distributed
from such Trust (including any original issue discount) on, or any gain from the
sale or other disposition of, his Units or the sale or disposition of any U.S.
Treasury Obligations by the Trustee, provided that (i) the interest income or
gain is not effectively connected with the conduct by the Foreign Investor of a
trade or business within the United States, (ii) with respect to any gain, the
Foreign Investor (if an individual) is not present in the United States for 183
days or more during the taxable year, and (iii) the Foreign Investor provides
the required certification of his status and of the matters contained in clauses
(i) and (ii) above, and further provided that the exemption from withholding for
U.S. Federal income taxes for interest on any U.S. Treasury Obligation shall
only apply to the extent the U.S. Treasury Obligation was issued by July 18,
1984.
Unless an applicable treaty exemption applies and proper certification is made,
amounts otherwise distributable by the Trust to a Foreign Investor will
generally be subject to withholding taxes under Section 1441 of the Code unless
the Unitholder timely provides his financial representative or the Trustee with
a statement that (i) is signed by the Unitholder under penalties of perjury,
(ii) certifies that such Unitholder is not a United States person, or in the
case of an individual, that he is neither a citizen nor a resident of the United
States, and (iii) provides the name and address of the Unitholder. The
statement may be made, at the option of the person otherwise required to
withhold, on Form W-8 or on a substitute form that is substantially similar to
Form W-8. If the information provided on the statement changes, the beneficial
owner must so inform the person otherwise required to withhold within 30 days of
such change.
The foregoing discussion relates only to Federal income taxes on distributions
by a Trust. Foreign Unitholders should consult their own tax advisers with
respect to the foreign and United States tax consequences or ownership of Units.
The Sponsor believes that Unitholders who are individuals will not be subject to
any state personal income taxes on the interest received by a Trust and
distributed to them. However, Unitholders (including individuals) may be
subject to state and local taxes on any capital gains (or market discount
treated as ordinary income) derived from a Trust and to other state and local
taxes (including corporate income or franchise taxes, personal property or
intangibles taxes, and estate or inheritance taxes) on their Units or the income
derived therefrom. In addition, individual Unitholders (and any other
Unitholders which are not subject to state and local taxes on the interest
income derived from a Trust) will probably not be entitled to a deduction for
state and local tax purposes for their share of the fees and expenses paid by a
Trust, for any amortized bond premium or for any interest on indebtedness
incurred to purchase or carry their Units. Therefore, even though the Sponsor
believes that interest income from a Trust is exempt from state personal income
taxes in all states Unitholders should consult their own tax advisers with
respect to state and local taxation.
It should be remembered that even if distributions are reinvested, they are
still treated as distributions for income tax purposes.
In addition, Unitholders may be required for Federal income tax purposes to
include amounts in ordinary gross income in advance of the receipt of the cash
attributable to such income.
20
<PAGE>
Each Unitholder (other than a foreign investor who has properly provided the
certifications described above) will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by a Trust to such
Unitholder will be subject to back up withholding.
TAX REPORTING AND REALLOCATION
Because each Trust receives interest and makes monthly distributions based upon
such Trust's expected total collections of interest and any anticipated
expenses, certain tax reporting consequences may arise. Each Trust is required
to report Unitholder information to the Internal Revenue Service ("IRS"), based
upon the actual collection of interest by such Trust on the securities in such
Trust, without regard to such Trust's expenses or to such Trust's payments to
Unitholders during the year. If distributions to Unitholders exceed interest
collected, the difference will be reported as a return of principal which will
reduce a Unitholder's cost basis in its Units (and its pro rata interest in the
securities in the Trust). A Unitholder must include in taxable income the
amount of income reported by a Trust to the IRS regardless of the amount
distributed to such Unitholder. If a Unitholder's share of taxable income
exceeds income distributions made by a Trust to such Unitholder, such excess is
in all likelihood attributable to the payment of miscellaneous expenses of such
Trust which will not be deductible by an individual Unitholder as an itemized
deduction except, as discussed above, to the extent that the total amount of
certain itemized deductions, such as investment expenses (which would include
the Unitholder's share of Trust expenses), tax return preparation fees and
employee business expenses, exceeds 2% of such Unitholder's adjusted gross
income. Alternatively, in certain cases, such excess may represent an increase
in the Unitholder's tax basis in the Units owned. Investors with questions
regarding these issues should consult with their tax advisers.
ESTIMATED CASH FLOWS TO UNITHOLDERS
The tables below set forth the per Unit estimated distributions of interest and
principal to Unitholders. The tables assume no changes in Trust expenses, no
redemptions or sales of the underlying U.S. Treasury Obligations prior to
maturity and the receipt of all principal due upon maturity. To the extent the
foregoing assumptions change actual distributions will vary.
<TABLE>
<CAPTION>
U.S. TREASURY PORTFOLIO SERIES 21
Estimated Estimated Estimated
Interest Principal Total
Dates Distribution Distribution Distribution
----- ------------ ------------ ------------
<S> <C> <C> <C>
July 15, 1999 $.0047 $.0047
August 15, 1999 to April 15, 2004 $.0491 $.0491
May 15, 2004 $.0491 $2.00 $2.0491
June 15, 2004 to April 15, 2005 $.0370 $.0370
May 15, 2005 $.0370 $2.00 $2.0370
June 15, 2005 to April 15, 2006 $.0261 $.0261
May 15, 2006 $.0261 $2.00 $2.0261
June 15, 2006 to April 15, 2007 $.0204 $.0204
May 15, 2007 $.0204 $2.00 $2.0204
June 15, 2007 to April 15, 2008 $.0094 $.0094
May 15, 2008 $.0094 $2.00 $2.0094
</TABLE>
21
<PAGE>
REPORT OF ALLEN, GIBBS & HOULIK, L.C.
INDEPENDENT AUDITORS
UNITHOLDERS
RANSON UNIT INVESTMENT TRUSTS, SERIES 83
We have audited the accompanying statements of financial condition, including
the Trust portfolios, of Ranson Unit Investment Trusts, Series 83, as of the
opening of business on June 23, 1999, the Initial Date of Deposit. The
statements of financial condition are the responsibility of the Sponsor. Our
responsibility is to express an opinion on the statements of financial condition
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statements of financial condition are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statements of financial condition.
Our procedures included confirmation of cash, a letter of credit deposited, or
the purchase of 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 statements of financial
condition presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the statements of financial condition referred to above present
fairly, in all material respects, the financial position of Ranson Unit
Investment Trusts, Series 83 as of June 23, 1999, in conformity with generally
accepted accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
June 23, 1999
22
<PAGE>
<TABLE>
<CAPTION>
RANSON UNIT INVESTMENT TRUSTS, SERIES 83
STATEMENTS OF FINANCIAL CONDITION
AT THE OPENING OF BUSINESS ON JUNE 23, 1999, THE INITIAL DATE OF DEPOSIT
GNMA U.S. Treasury
Portfolio Portfolio
Series 12 Series 21
--------- -------------
<S> <C> <C>
TRUST PROPERTY
Investment in securities--
Securities deposited in Trust (1) $ 154,919 $ 493,887
Accrued interest to Initial Date of Deposit on Securities (2) 94 3,120
Organizational Costs (3) 5,000 5,000
Less distributions payable (2) (94) (3,120)
Less accrued organizational costs (3) (5,000) (5,000)
--------- ---------
Net assets, applicable to outstanding Units of fractional undivided interest $ 154,919 $ 493,887
========= =========
INTEREST OF UNITHOLDERS
Cost to investors (4) $ 161,289 $ 503,709
Less sales charge (4) (6,370) (9,822)
--------- ---------
Net proceeds to the Trust, equal to net assets $ 154,919 $ 493,887
========= =========
<FN>
- --------------------
NOTES:
(1) Aggregate cost to the Trust of the Securities listed in the Trust Portfolio
is based on offering side evaluations determined by Muller Data Corporation.
(2) Pursuant to the Trust Agreement, the Trustee will advance funds in the amount
of $3,770 representing the accrued interest to June 28, 1999 (the "First
Settlement Date") and such advance will be distributed to the Sponsor.
(3) Each Trust will bear all or a portion of its organizational costs, which the
Sponsor intends to defer and amortize over a five year period or over the
life of the related Trust if less than five years. Organizational costs have
been estimated based on a projected Trust size of $10,000,000 and $5,000,000
for GNMA Portfolio Series 12 and U.S. Treasury Portfolio Series 21,
respectively. Organizational costs may be or more or less than this estimate
based upon the actual size of each Trust.
(4) The aggregate cost to investors (exclusive of interest) includes a sales
charge as set forth under "Essential Information" assuming no reduction of
sales charge for quantity purchases.
</TABLE>
23
<PAGE>
GENERAL INFORMATION
RISK FACTORS
All investments involve risk. This section describes the main risks that can
impact the value of securities in your Trust. You should understand these risks
before you invest. If the value of the securities falls, the value of your
Units will also fall. We cannot guarantee that your Trust will achieve it
objective or that your investment return will be positive over any period.
MARKET RISK is the risk that the value of the securities in your Trust will
fluctuate. This could cause the value of your Units to fall below your original
purchase price or below the par value. Market value fluctuates in response to
various factors. These can include changes in interest rates, inflation, the
financial condition of a security's issuer, perceptions of the issuer, or
ratings on a security. Even though we carefully supervise your portfolio, you
should remember that we do not manage your portfolio. Your Trust will not sell
a security solely because the market value falls as is possible in a managed
fund.
INTEREST RATE RISK is the risk that the value of securities will fall if
interest rates increase. The securities in your Trust typically fall in value
when interest rates rise and rise in value when interest rates fall. Securities
with longer periods before maturity are often more sensitive to interest rate
changes.
CREDIT RISK is the risk that a security's issuer is unable to meet its
obligation to pay principal or interest on the security.
CALL RISK is the risk that the issuer prepays or "calls" a security before
its stated maturity. An issuer might call a security if interest rates fall and
the security pays a higher interest rate or if it no longer needs the money for
the original purpose. If an issuer calls a security, your Trust will distribute
the principal to you but your future interest distributions will fall. You also
might not be able to reinvest this principal at as high a yield. A security's
call price could be less than the price your Trust paid for the security and
could be below the security's par value. This means that you could receive less
than the amount you paid for your Units. If enough securities in your Trust are
called, your Trust could terminate early.
SECURITY QUALITY RISK is the risk that a security will fall in value if a
rating agency decreases the security's rating.
SECURITY CONCENTRATION RISK is the risk that your Trust is less diversified
because it concentrates in a particular type of security. When a certain type
of security makes up 25% or more of a Trust, the Trust is considered to be
"concentrated" in that security type. We describe the different security types
in the section describing each Trust.
REDUCED DIVERSIFICATION RISK is the risk that your Trust will become smaller
and less diversified as securities are sold, are called or mature. This could
increase your risk of loss and increase your share of Trust expenses.
LIQUIDITY RISK is the risk that the value of a security will fall if trading
in the security is limited or absent. No one can guarantee that a liquid
trading market will exist for any security because these securities generally
trade in the over-the-counter market (they are not listed on a securities
exchange).
24
<PAGE>
LITIGATION AND LEGISLATION RISK is the risk that future litigation or
legislation could affect the value of your Trust. For example, future
legislation could reduce tax rates, impose a flat tax, exempt all investment
income from tax or change the tax status of the securities. Litigation could
challenge an issuer's authority to issue or make payments on securities.
PUBLIC OFFERING OF UNITS
Public Offering Price. Units of a Trust are offered at the Public Offering
Price thereof. During the initial offering period, the Public Offering Price
per Unit is equal to the aggregate of the offering side evaluations of the
Securities in such Trust (as determined, pursuant to the terms of a contract
with the Evaluator, by Muller Data Corporation, a non-affiliated firm regularly
engaged in the business of evaluating, quoting or appraising comparable
securities), plus or minus a pro rata share of cash, if any, in the Principal
account held or owned by such Trust plus accrued interest plus the applicable
sales charge referred to in the tables below divided by the number of
outstanding Units of such Trust. The Public Offering Price for secondary market
transactions, on the other hand, is based on the aggregate bid side evaluations
of the Securities in a Trust (also, currently, as determined by Muller Data
Corporation), plus or minus cash, if any, in the Principal Account held or owned
by such Trust, plus accrued interest plus a sales charge based upon the dollar
weighted average maturity of such Trust. The minimum purchase is 100 Units (25
Units for retirement plans or Uniform Gifts to Minors Act purchases).
For GNMA Portfolios, the sales charge per Unit will be reduced during the
primary and secondary offering periods pursuant to the following graduated
scale:
<TABLE>
<CAPTION>
Long-Term Trust
-------------------------
Percent of Percent of
Offering Net Amount
Ticket Size* Price Invested
- ------------ ---------- ----------
<S> <C> <C>
Less than $100,000 3.95% 4.112%
$100,000 to $249,999 3.70 3.842
$250,000 to $499,999 3.35 3.466
$500,000 to $999,999** 3.10 3.199
<FN>
- --------------------
* The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied
on whichever basis is more favorable to the investor.
** For any transactions in excess of these amounts, contact the Sponsor for the
applicable sales charge.
</TABLE>
25
<PAGE>
The sales charge per Unit for U.S. Treasury Portfolio Series (other than Series
which contain predominantly zero coupon U.S. Treasury Obligations) will be
reduced pursuant to the following graduated scale:
<TABLE>
<CAPTION>
Weighted Average Years to Maturity
----------------------------------
3 to 5.99
----------------------------------
Percent of Percent of
Offering Net Amount
Ticket Size* Price Invested
- ------------ -------------- -------------
<S> <C> <C>
Less than $500,000 1.95% 1.989%
$500,000 to $999,999 1.70 1.729
$1,000,000 to $1,499,999** 1.30 1.317
<FN>
- --------------------
* The breakpoint sales charges are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied
on whichever basis is more favorable to the investor.
** For any transactions in excess of these amounts, contact the Sponsor for the
applicable sales charge.
</TABLE>
As indicated above, in connection with secondary market transactions the sales
charge is based upon the dollar weighted average maturity of a Trust and is
determined in accordance with the tables set forth below. For purposes of this
computation, Securities will be deemed to mature on their expressed maturity
dates unless: (a) the Securities have been called for redemption or funds or
securities have been placed in escrow to redeem them on an earlier call date, in
which case such call date will be deemed to be the date upon which they mature;
or (b) such Securities are subject to a "mandatory tender," in which case such
mandatory tender will be deemed to be the date upon which they mature. The
effect of this method of sales charge computation will be that different sales
charge rates will be applied to a Trust based upon the dollar weighted average
maturity of such Trust's portfolio, in accordance with the following schedules.
In connection with secondary market transactions of all U.S. Treasury
Portfolios, the sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
Secondary
---------------------------------------------------------------------------
Dollar Weighted Average Years to Maturity
---------------------------------------------------------------------------
0-1.99 Yrs. 2-2.99 Yrs. 3-4.99 Yrs. 5-6.99 Yrs. 7-9.99 Yrs.
----------- ----------- ----------- ----------- -----------
Dollar Amount of Trade Sales Charge (Percent of Public Offering Price)
----------------------
<S> <C> <C> <C> <C> <C>
Less than $500,000 1.25% 1.50% 1.75% 2.25% 3.00%
$500,000 to $999,999 1.00 1.25 1.50 1.75 2.50
$1,000,000 to $1,499,999* 1.00 1.00 1.25 1.50 2.00
<FN>
- --------------------
* For any transaction in excess of $1,499,999 contact the Sponsor for the
applicable sales charge.
</TABLE>
The reduced sales charges resulting from quantity discounts as shown in the
tables above will apply to all purchases of Units on any one day by the same
purchaser from the same Underwriter or dealer and for this purpose purchases of
Units of a Trust Fund will be aggregated with concurrent purchases of Units of
any other unit investment trust that may be offered by the Sponsor. In
addition, during the initial offering period only, the reduced sales charges
resulting from
26
<PAGE>
quantity discounts as shown in the table above will apply to all purchases of
Units of a single Trust by the same person on such person's initial purchase
date or on any day subsequent to such initial purchase date, provided that the
person purchasing the Units purchased at least 25,000 Units on such initial
purchase date; to determine the applicable sales charge reduction it is
necessary to accumulate all purchases made on the purchaser's initial purchase
date and all purchases made subsequent to such initial purchase date.
For purposes of the reduced sales charges from quantity discounts, Units
purchased in the name of a spouse or child (under 21) of such purchaser will be
deemed to be additional purchases by such purchaser. The reduced sales charges
will also be applicable to a trust or other fiduciary purchasing for a single
trust estate or single fiduciary account.
Units may be purchased in the primary or secondary market at the Public Offering
Price less the concession the Sponsor typically allows to dealers and other
selling agents for purchases (see "Public Distribution of Units") by investors
who purchase Units through registered investment advisers, certified financial
planners or registered broker-dealers who in each case either charge periodic
fees for financial planning, investment advisory or asset management services,
or provide such services in connection with the establishment of an investment
account for which a comprehensive "wrap fee" charge is imposed.
For purposes of calculating the applicable sales charge, purchasers who have
indicated their intent to purchase a specified amount of Units of any Ranson
sponsored unit investment trust in the primary offering period by executing and
delivering a letter of intent to the Sponsor, which letter of intent must be in
a form acceptable to the Sponsor and shall have a maximum duration of thirteen
months, will be eligible to receive a reduced sales charge according to the
following tables based on the amount of intended aggregate purchases as
expressed in the letter of intent. A Unitholder who purchases Units during the
letter of intent period in excess of the number of Units specified in a
Unitholders letter of intent, the amount of which would cause the Unitholder to
be eligible to receive an additional sales charge reduction, will be allowed
such additional sales charge reduction on the purchase of Units which caused the
Unitholder to reach such new breakpoint level on all additional purchases of
Units during the letter of intent period. If the total purchases are less than
the amount specified, the Unitholder involved must pay the Sponsor an amount
equal to the difference between the amount paid for these purchases and the
amounts which would have been paid if the higher sales charge had been applied;
the Unitholder will, however, be entitled to any reduced sales charge qualified
for by reaching any lower breakpoint level.
The Sponsor intends to permit officers, directors and employees of the Sponsor
and Evaluator and, at the discretion of the Sponsor, registered representatives
of selling firms to purchase Units of a Trust without a sales charge, although a
transaction processing fee may be imposed on such trades.
Had Units of a Trust been available for sale at the opening of business on the
Initial Date of Deposit, the Public Offering Price would have been as shown
under "Essential Information." The Public Offering Price per Unit of a Trust on
the date of this Prospectus or on any subsequent date will vary from the amount
stated under "Essential Information" in accordance with fluctuations in the
prices of the underlying Securities and the amount of accrued interest on the
Units. On the Initial Date of Deposit, pursuant to an exemptive order from the
Securities and Exchange Commission, the Public Offering Price at which Units
will be sold will not exceed the price determined as of the opening of business
on the Initial Date of Deposit as shown under "Essential Information"; however,
should the value of the underlying Securities decline, purchasers will, of
course, be given the benefit of such lower price. The aggregate bid and
offering side evaluations of the Securities shall be determined (a) on the basis
of current bid or offering prices of the Securities, (b) if bid or offering
prices are not available for any particular Security, on the basis of current
bid or offering prices for comparable bonds, (c) by determining the value of
Securities on the bid or offer side of the market by appraisal, or (d) by any
combination of the above.
27
<PAGE>
The foregoing evaluations and computations shall be made as of the evaluation
time stated under "Essential Information," on each business day commencing with
the Initial Date of Deposit of the Securities, effective for all sales made
during the preceding 24-hour period.
The interest on the Securities deposited in a Trust, less the related estimated
fees and expenses, is estimated to accrue in the annual amounts per Unit set
forth under "Essential Information." The amount of net interest income which
accrues per Unit may change as Securities mature or are redeemed, exchanged or
sold, or as the expenses of a Trust change or the number of outstanding Units of
a Trust changes.
Although payment is normally made three business days following the order for
purchase, payments may be made prior thereto. A person will become the owner of
Units on the date of settlement provided payment has been received. Cash, if
any, made available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be deemed to be
a benefit to the Sponsor, subject to the limitations of the Securities Exchange
Act of 1934. If a Unitholder desires to have certificates representing Units
purchased, such certificates will be delivered as soon as possible following his
written request therefor. For information with respect to redemption of Units
purchased, but as to which certificates requested have not been received, see
"General Information-Redemption" below.
Accrued Interest. Accrued interest is the accumulation of unpaid interest on a
security from the last day on which interest thereon was paid. Interest on
Securities generally is paid semi-annually (monthly in the case of Ginnie Maes,
if any) although a Trust accrues such interest daily. Because of this, a Trust
always has an amount of interest earned but not yet collected by the Trustee.
For this reason, with respect to sales settling subsequent to the First
Settlement Date, the Public Offering Price of Units will have added to it the
proportionate share of accrued interest to the date of settlement. Unitholders
will receive on the next distribution date of a Trust the amount, if any, of
accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would otherwise have
to be paid in addition to the Public Offering Price in the sale of Units to the
public, the Trustee will advance the amount of accrued interest as of the First
Settlement Date and the same will be distributed to the Sponsor as the
Unitholder of record as of the First Settlement Date. Consequently, the amount
of accrued interest to be added to the Public Offering Price of Units will
include only accrued interest from the First Settlement Date to the date of
settlement, less any distributions from the Interest Account subsequent to the
First Settlement Date.
Because of the varying interest payment dates of the Securities, accrued
interest at any point in time will be greater than the amount of interest
actually received by the Trusts and distributed to Unitholders. Therefore,
there will always remain an item of accrued interest that is added to the value
of the Units. If a Unitholder sells or redeems all or a portion of his Units,
he will be entitled to receive his proportionate share of the accrued interest
from the purchaser of his Units. Since the Trustee has the use of the funds
held in the Interest Account for distributions to Unitholders and since such
Account is noninterest-bearing to Unitholders, the Trustee benefits thereby.
Comparison of Public Offering Price and Redemption Price. While the Initial
Public Offering Price of Units will be determined on the basis of the current
offering prices of the Securities in a Trust, the redemption price per Unit (as
well as the secondary market price per Unit) at which Units may be redeemed (see
"General Information-Redemption") will be determined on the basis of the current
bid prices of the Securities. As of the opening of business on the Initial Date
of Deposit, the Public Offering Price per Unit (based on the offering prices of
the Securities in a Trust and including the sales charge) exceeded the
redemption price at which Units could have been redeemed (based upon the current
bid prices of the Securities in a Trust) by the amount shown under "Essential
28
<PAGE>
Information." Under current market conditions the bid prices for U.S. Treasury
Obligations are expected to be approximately 1/8 to 1/4 of 1% lower than the
offer price of such obligations. In the past, bid prices on securities similar
to those in the Trust Funds have been lower than the offering prices thereof by
as much as 5% or more of principal amount in the case of inactively traded bonds
or as little as 1/2 of 1% in the case of actively traded bonds, but the
difference between such offering and bid prices may be expected to average 3% to
4% of principal amount. For this reason, among others (including fluctuations
in the market prices of the Securities and the fact that the Public Offering
Price includes a sales charge), the amount realized by a Unitholder upon any
redemption of Units may be less than the price paid for such Units.
Public Distribution of Units. The Sponsor intends to qualify the Units for sale
in a number of states (except for an Insured State Trust or uninsured State
Trust which will be qualified for sale only in the state for which such Trust is
named). Units will be sold through dealers who are members of the National
Association of Securities Dealers, Inc. and through others. Sales may be made
to or through dealers at prices which represent discounts from the Public
Offering Price as set forth below. Certain commercial banks are making Units of
the Trust Funds available to their customers on an agency basis. A portion of
the sales charge paid by their customers is retained by or remitted to the banks
in the amount shown in the tables below. Under the Glass-Steagall Act, banks
are prohibited from underwriting Trust Fund Units; however, the Glass-Steagall
Act does permit certain agency transactions and the banking regulators have
indicated that these particular agency transactions are permitted under such
Act. In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and banks and financial
institutions may be required to register as dealers pursuant to state law. The
Sponsor reserves the right to change the discounts set forth below from time to
time. In addition to such discounts, the Sponsor may, from time to time, pay or
allow an additional discount, in the form of cash or other compensation, to
dealers employing registered representatives who sell, during a specified time
period, a minimum dollar amount of Units of a Trust and other unit investment
trusts created by the Sponsor. The difference between the discount and the
sales charge will be retained by the Sponsor.
For GNMA portfolios, the primary and secondary market concessions or agency
commissions are as follows:
<TABLE>
<CAPTION>
Long Term Trusts
---------------------------------------------------------------------
Secondary
Primary Market Market
------------------------------------------------------- ---------
Volume Discounts**
-------------------------------------------
Firm Sales Firm Sales Firm Sales
Regular or Sale or Sale or Sale
Concession Arrangements Arrangements Arrangements
or Agency ($250,000 to ($500,000 to ($1,000,000 All
Dollar Amount of Trade* Commission $499,999) $999,999) or more) Sales
- ----------------------- ---------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C>
$0 to $99,999 2.50% 2.60% 2.65% 2.70% 2.60%
$100,000 to $249,999 2.50 2.55 2.60 2.65 2.60
$250,000 to $499,999 2.25 2.30 2.30 2.35 2.30
$500,000 to $999,999*** 2.00 2.05 2.05 2.10 2.05
<FN>
- --------------------
* The breakpoint discount are also applied on a Unit basis utilizing a breakpoint
equivalent in the above table of $1,000 per 100 Units.
** Volume discounts will be given to firms who reach cumulative firm sales or
sales arrangement levels of at least $250,000 during the initial one month
period after the Initial Date of Deposit. After a firm has met the minimum
29
<PAGE>
$250,000 volume level, volume discounts will be given on all trades
originated from or by that firm, including those placed prior to reaching the
$250,000 level, and will continue to be given during the entire initial
offering period.
*** For any transactions in excess of these amounts, contact the Sponsor for the
applicable rates.
</TABLE>
The primary market concessions or agency commissions for U.S. Treasury Portfolio
Series (other than Series which contain predominantly zero coupon U.S. Treasury
Obligations) are as follows:
<TABLE>
Primary Market
-----------------------------------------
Volume Discounts**
------------------
Firm Sales
Regular or Sale
Concession Arrangements
or Agency ($1,000,000 or
Commission More
----------------- ------------------
0-2.99 3-4.99 0-2.99 3-4.99
Dollar Amount of Trade* Years Years Years Years
- ----------------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
$0 to $499,999 1.05% 1.10% 1.05% 1.20%
$500,000 to $999,999 .90 1.00 .95 1.10
$1,000,000 to $1,499,999*** .75 .75 .80 .80
<FN>
- --------------------
* The breakpoint discounts are also applied on a Unit basis utilizing a
breakpoint equivalent in the above table of $1,000 per 100 Units.
** For U.S. Treasury Portfolio Series other than Series which contain
predominantly zero coupon U.S. Treasury Obligations, volume concessions of up
to the amount listed above can be earned as a marketing allowance at the
discretion of the Sponsor during the initial one month period after the
Initial Date of Deposit for firms who reach cumulative firm sales or sales
arrangement levels of at least $1 million. After a firm has met the
respective minimum volume level, volume concessions will be given on all
trades originated from or by that firm, starting on the Initial Date of
Deposit, including those placed prior to reaching the minimum level, and will
continue to be given during the entire initial offering period. Firm sales
of any primary U.S. Treasury Portfolio Series issued can be combined for the
purposes of achieving the volume discount. Only sales through the Sponsor
qualify for volume concessions and secondary purchases do not apply. The
Sponsor reserves the right to modify or change these parameters at any time
and make the determination of which firms qualify for the marketing allowance
and the amount paid.
*** For any transactions in excess of these amounts, contact the Sponsor for the
applicable concessions or agency commissions.
</TABLE>
30
<PAGE>
In connection with secondary market transactions of all U.S. Treasury
Portfolios, the sales charge per Unit will be reduced as set forth below:
<TABLE>
<CAPTION>
Secondary
-------------------------------------------------------------------
Dollar Weighted Average Years to Maturity
-------------------------------------------------------------------
0-1.99 Yrs. 2-2.99 Yrs. 3-4.99 Yrs. 5-6.99 Yrs. 7-9.99 Yrs.
----------- ----------- ----------- ----------- -----------
Dollar Amount of Trade Sales Charge (Percent of Public Offering Price)
----------------------
<S> <C> <C> <C> <C> <C>
Less than $500,000 1.25% 1.50% 1.75% 2.25% 3.00%
$500,000-$999,999 1.00 1.25 1.50 1.75 2.50
$1,000,000-$1,499,999* 1.00 1.00 1.25 1.50 2.00
<FN>
- --------------------
* For any transaction in excess of $1,499,999 contact the Sponsor for the
applicable sales charge.
</TABLE>
The Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units.
Profits of Sponsor. The Sponsor will receive gross sales charges equal to the
percentage of the Offering Price of the Units of such Trusts stated under
"Public Offering Price" and will pay a fixed portion of such sales charges to
dealers and agents. In addition, the Sponsor may realize a profit or a loss
resulting from the difference between the purchase prices of the Securities to
the Sponsor and the cost of such Securities to a Trust Fund, which is based on
the offering side evaluation of the Securities. See "Portfolio" for each Trust.
The Sponsor may also realize profits or losses with respect to Securities
deposited in a Trust which were acquired from underwriting syndicates of which
the Sponsor was a member. An underwriter or underwriting syndicate purchases
securities from the issuer on a negotiated or competitive bid basis, as
principal, with the motive of marketing such securities to investors at a
profit. The Sponsor may realize additional profits or losses during the initial
offering period on unsold Units as a result of changes in the daily evaluation
of the Securities in a Trust.
TRUST INFORMATION
Because certain of the Securities in certain of the Trusts may from time to time
under certain circumstances be sold or redeemed or will mature in accordance
with their terms and because the proceeds from such events will be distributed
to Unitholders and will not be reinvested, no assurance can be given that a
Trust will retain for any length of time its present size and composition.
Neither the Sponsor nor the Trustee shall be liable in any way for any default,
failure or defect in any Security. In the event of a failure to deliver any
Security that has been purchased for a Trust under a contract, including those
securities purchased on a "when, as and if issued" basis ("Failed Securities"),
the Sponsor is authorized under the Trust Agreement to direct the Trustee to
acquire other securities ("Replacement Securities") to make up the original
corpus of such Trust.
Securities in certain of the Trust Funds may have been purchased on a "when, as
and if issued" or delayed delivery basis with delivery expected to take place
after the First Settlement Date. See "Notes to Portfolios" for each Trust.
Accordingly, the delivery of such Securities may be delayed or may not occur.
Interest on these Securities begins accruing to the benefit of Unitholders on
their respective dates of delivery. To the extent any Municipal Bonds in a Tax-
Exempt Portfolio are actually delivered to such Trust after their respective
expected dates of delivery, Unitholders who purchase Units in such Trust prior
to the date such "when, as and if issued" or "delayed delivery" Municipal Bonds
are actually delivered to the Trustee would, to the extent such income is not
offset by a reduction
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in the Trustee's fee (or, to the extent necessary, other expenses), be required
to reduce their tax basis in their Units of such Trust since the interest
accruing on such Municipal Bonds during the interval between their purchase of
Units and the actual delivery of such Municipal Bonds would, for tax purposes,
be considered a non-taxable return of principal rather than as tax-exempt
interest. The result of such adjustment, if necessary, would be, during the
first year only, that the Estimated Long-Term Returns may be, and the Estimated
Current Returns would be, slightly lower than those shown herein, assuming such
Trust portfolios and estimated annual expenses do not vary. See footnote (4) to
"Essential Information." Unitholders of all Trusts will be "at risk" with
respect to any "when, as and if issued" or "delayed delivery" Securities
included in their respective Trust (i.e., may derive either gain or loss from
fluctuations in the evaluation of such Securities) from the date they commit for
Units.
The Replacement Securities must be purchased within 20 days after delivery of
the notice that a contract to deliver a Security will not be honored and the
purchase price may not exceed the amount of funds reserved for the purchase of
the Failed Securities. The Replacement Securities (i) must be payable in United
States currency, (ii) must be purchased at a price that results in a yield to
maturity and a current return at least equal to that of the Failed Securities as
of the Initial Date of Deposit, (iii) shall not be "when, as and if issued" or
restricted securities, (iv) must satisfy any rating criteria for Securities
originally included in such Trust, (v) not cause the Units of such Trust to
cease to be rated AAA by Standard & Poor's if the Units were so rated on the
Initial Date of Deposit and (vi) in the case of Insured Trust Funds must be
insured prior to acquisition by a Trust. In connection with an Insured Corporate
Series, an Investment Grade Series or High Yield Series, Replacement Securities
also must be bonds, debentures, notes or other straight debt obligations
(whether secured or unsecured and whether senior or subordinated) without equity
or other conversion features, with fixed maturity dates substantially the same
as those of the Failed Securities having no warrants or subscription privileges
attached and (ii) be issued after July 18, 1984 if interest thereon is United
States source income. In connection with a Tax-Exempt Portfolio only,
Replacement Securities must also (i) be tax-exempt bonds issued by the
appropriate state or counties, municipalities, authorities or political
subdivisions thereof and (ii) have a fixed maturity date of at least 3 years if
the bonds are to be deposited in a trust other than a long-term trust or at
least 10 years if the bonds are to be deposited in a long-term trust. Whenever
a Replacement Security is acquired for a Trust, the Trustee shall, within five
days thereafter, notify all Unitholders of the Trust of the acquisition of the
Replacement Security and shall, on the next monthly distribution date which is
more than 30 days thereafter, make a pro rata distribution of the amount, if
any, by which the cost to the Trust of the Failed Security exceeded the cost of
the Replacement Security. Once all of the Securities in a Trust are acquired,
the Trustee will have no power to vary the investments of the Trust, i.e., the
Trustee will have no managerial power to take advantage of market variations to
improve a Unitholder's investment.
If the right of limited substitution described in the preceding paragraphs is
not utilized to acquire Replacement Securities in the event of a failed
contract, the Sponsor will refund the sales charge attributable to such Failed
Securities to all Unitholders of the Trust Fund and the Trustee will distribute
the principal and accrued interest attributable to such Failed Securities not
more than 30 days after the date on which the Trustee would have been required
to purchase a Replacement Security. In addition, Unitholders should be aware
that, at the time of receipt of such principal, they may not be able to reinvest
such proceeds in other securities at a yield equal to or in excess of the yield
which such proceeds would have earned for Unitholders of such Trust Fund.
Whether or not a Replacement Security is acquired, an amount equal to the
accrued interest (at the coupon rate of the Failed Securities) will be paid to
Unitholders of the Trust Fund to the date the Sponsor removes the Failed
Securities from the Trust Fund if the Sponsor determines not to purchase a
Replacement Security or to the date of substitution if a Replacement Security is
purchased. All such interest paid to Unitholders which accrued after the date
of
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<PAGE>
settlement for a purchase of Units will be paid by the Sponsor. In the event a
Replacement Security could not be acquired by a Trust, the net annual interest
income per Unit for such Trust would be reduced and the Estimated Current Return
and Estimated Long-Term Return might be lowered.
Subsequent to the Initial Date of Deposit, a Security may cease to be rated or
its rating may be reduced below any minimum required as of the Initial Date of
Deposit. Neither event requires the elimination of such investment from a
Trust, but may be considered in the Sponsor's determination to direct the
Trustee to dispose of such investment. See "General Information-Investment
Supervision."
The Sponsor may not alter the portfolio of a Trust except upon the happening of
certain extraordinary circumstances. See "General Information-Investment
Supervision." Certain of the Securities may be subject to optional call or
mandatory redemption pursuant to sinking fund provisions, in each case prior to
their stated maturity. A bond subject to optional call is one which is subject
to redemption or refunding prior to maturity at the option of the issuer, often
at a premium over par. A refunding is a method by which a bond issue is
redeemed, at or before maturity, by the proceeds of a new bond issue. A bond
subject to sinking fund redemption is one which is subject to partial call from
time to time at par with proceeds from a fund accumulated for the scheduled
retirement of a portion of an issue to maturity. Special or extraordinary
redemption provisions may provide for redemption at par of all or a portion of
an issue upon the occurrence of certain circumstances, which may be prior to the
optional call dates shown under "Portfolio" for each Trust. Redemption pursuant
to optional call provisions is more likely to occur, and redemption pursuant to
special or extraordinary redemption provisions may occur, when the Securities
have an offering side evaluation which represents a premium over par, that is,
when they are able to be refinanced at a lower cost. The proceeds from any such
call or redemption pursuant to sinking fund provisions, as well as proceeds from
the sale of Securities and from Securities which mature in accordance with their
terms from a Trust, unless utilized to pay for Units tendered for redemption,
will be distributed to Unitholders of such Trust and will not be used to
purchase additional Securities for such Trust. Accordingly, any such call,
redemption, sale or maturity will reduce the size and diversity of a Trust and
the net annual interest income of such Trust and may reduce the Estimated
Current Return and the Estimated Long-Term Return. See "General
Information-Interest, Estimated Long-Term Return and Estimated Current Return."
The call, redemption, sale or maturity of Securities also may have tax
consequences to a Unitholder. See "Federal Tax Status" for each Trust.
Information with respect to the call provisions and maturity dates of the
Securities is contained in "Portfolio" for each Trust.
Each Unit of a Trust represents an undivided fractional interest in the
Securities deposited therein, in the ratio shown under "Essential Information."
Units may be purchased and certificates, if requested, will be issued in
denominations of one Unit or any multiple or fraction thereof, subject to each
Trust's minimum investment requirement of one Unit. Fractions of Units will be
computed to three decimal points. To the extent that Units of a Trust are
redeemed, the principal amount of Securities in such Trust will be reduced and
the undivided fractional interest represented by each outstanding Unit of such
Trust will increase. See "General Information-Redemption."
Certain of the Securities in certain of the Trusts may have been acquired at a
market discount from par value at maturity. The coupon interest rates on the
discount securities at the time they were purchased and deposited in the Trusts
were lower than the current market interest rates for newly issued bonds of
comparable rating and type. If such interest rates for newly issued comparable
securities increase, the market discount of previously issued securities will
become greater, and if such interest rates for newly issued comparable
securities decline, the market discount of previously issued securities will be
reduced, other things being equal. Investors should also note that the value of
securities purchased at a market discount will increase in value faster than
securities purchased at a market
33
<PAGE>
premium if interest rates decrease. Conversely, if interest rates increase, the
value of securities purchased at a market discount will decrease faster than
securities purchased at a market premium. In addition, if interest rates rise,
the prepayment risk of higher yielding, premium securities and the prepayment
benefit for lower yielding, discount securities will be reduced. A discount
security held to maturity will have a larger portion of its total return in the
form of taxable income and capital gain and loss in the form of tax-exempt
interest income than a comparable security newly issued at current market rates.
See "Federal Tax Status." Market discount attributable to interest changes does
not indicate a lack of market confidence in the issue. Neither the Sponsor nor
the Trustee shall be liable in any way for any default, failure or defect in any
of the Securities.
Certain of the Securities in certain of the Trust Funds may be "zero coupon"
bonds, i.e., an original issue discount bond that does not provide for the
payment of current interest. Zero coupon bonds are purchased at a deep discount
because the buyer receives only the right to receive a final payment at the
maturity of the bond and does not receive any periodic interest payments. The
effect of owning deep discount bonds which do not make current interest payments
(such as the zero coupon bonds) is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount earned during the life
of such obligation. This implicit reinvestment of earnings at the same rate
eliminates the risk of being unable to reinvest the income on such obligation at
a rate as high as the implicit yield on the discount obligation, but at the same
time eliminates the holder's ability to reinvest at higher rates in the future.
For this reason, zero coupon bonds are subject to substantially greater price
fluctuations during periods of changing market interest rates than are
securities of comparable quality which pay interest currently. For the Federal
tax consequences of original issue discount securities such as the zero coupon
bonds, see "Federal Tax Status" for each Trust.
To the best of the Sponsor's knowledge, there is no litigation pending as of the
Initial Date of Deposit in respect of any Security which might reasonably be
expected to have a material adverse effect on the Trust Funds. At any time
after the Initial Date of Deposit, litigation may be instituted on a variety of
grounds with respect to the Securities. The Sponsor is unable to predict
whether any such litigation may be instituted, or if instituted, whether such
litigation might have a material adverse effect on the Trust Funds. The Sponsor
and the Trustee shall not be liable in any way for any default, failure or
defect in any Security.
RETIREMENT PLANS
Units of the Trusts (other than a Tax-Exempt Portfolio) may be well suited for
purchase by Individual Retirement Accounts, Keogh Plans, pension funds and other
qualified retirement plans. Generally, capital gains and income received under
each of the foregoing plans are deferred from federal taxation. All
distributions from such plans are generally treated as ordinary income but may,
in some cases, be eligible for special income averaging or tax-deferred rollover
treatment. Investors considering participation in any such plan should review
specific tax laws related thereto and should consult their attorneys or tax
advisers with respect to the establishment and maintenance of any such plan.
Such plans are offered by brokerage firms and other financial institutions. The
Trusts will waive the $1,000 minimum investment requirement for IRA accounts.
The minimum investment is $250 for tax-deferred plans such as IRA accounts.
Fees and charges with respect to such plans may vary.
The Trustee has agreed to act as custodian for certain retirement plan accounts.
An annual fee of $12.00 per account, if not paid separately, will be assessed by
the Trustee and paid through the liquidation of shares of the reinvestment
account. An individual wishing the Trustee to act as custodian must complete an
Ranson UIT/IRA application and forward it along with a check made payable to The
Bank of New York. Certificates for Individual Retirement Accounts cannot be
issued.
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<PAGE>
DISTRIBUTION REINVESTMENT
Each Unitholder of a Trust may elect to have distributions of principal
(including capital gains, if any) or interest or both automatically invested
without charge in shares of certain mutual funds which are registered in such
Unitholder's state of residence and are underwritten or advised by Scudder
Kemper Investments, Inc. (the "Funds"), other than those Funds sold with a
contingent deferred sales charge.
If individuals indicate they wish to participate in the Reinvestment Program but
do not designate a reinvestment fund, the Program Agent referred to below will
contact such individuals to determine which reinvestment fund or funds they wish
to elect. Since the portfolio securities and investment objectives of such
Funds generally will differ significantly from that of the Trusts, Unitholders
should carefully consider the consequences before selecting such Funds for
reinvestment. Detailed information with respect to the investment objectives
and the management of the Funds is contained in their respective prospectuses,
which can be obtained from the Sponsor upon request. An investor should read
the prospectus of the reinvestment fund selected prior to making the election to
reinvest. Unitholders who desire to have such distributions automatically
reinvested should inform their broker at the time of purchase or should file
with the Program Agent a written notice of election.
Unitholders who are receiving distributions in cash may elect to participate in
distribution reinvestment by filing with the Program Agent an election to have
such distributions reinvested without charge. Such election must be received by
the Program Agent at least ten days prior to the Record Date applicable to any
distribution in order to be in effect for such Record Date. Any such election
shall remain in effect until a subsequent notice is received by the Program
Agent. See "General Information-Unitholders- Distributions to Unitholders."
The Program Agent is The Bank of New York. All inquiries concerning
participation in distribution reinvestment should be directed to the Program
Agent at its corporate trust office.
INTEREST, ESTIMATED LONG-TERM RETURN AND ESTIMATED CURRENT RETURN
As of the opening of business on the Initial Date of Deposit, the Estimated
Long-Term Return and the Estimated Current Return, if applicable, for each
Trust were as set forth in the "Essential Information" for each Trust.
Estimated Current Return is calculated by dividing the estimated net annual
interest income per Unit by the Public Offering Price. The estimated net
annual interest income per Unit will vary with changes in fees and expenses
of the Trustee, the Sponsor and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of the Securities while
the Public Offering Price will vary with changes in the offering price of
the underlying Securities and accrued interest; therefore, there is no
assurance that the present Estimated Current Return will be realized in the
future. Estimated Long-Term Return is calculated using a formula which (1)
takes into consideration, and determines and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirements or average life of all of the Securities in a Trust and (2)
takes into account the expenses and sales charge associated with each Trust
Unit. Since the market values and estimated retirements of the Securities
and the expenses of a Trust will change, there is no assurance that the
present Estimated Long-Term Return will be realized in the future.
Estimated Current Return and Estimated Long-Term Return are expected to
differ because the calculation of Estimated Long-Term Return reflects the
estimated date and amount of principal returned while Estimated Current
Return calculations include only net annual interest income and Public
Offering Price.
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<PAGE>
In order to acquire certain of the Securities contracted for by a Trust, it may
be necessary for the Sponsor or Trustee to pay on the dates for delivery of such
Securities amounts covering accrued interest on such Securities which exceed the
amount which will be made available in the letter of credit furnished by the
Sponsor on the Initial Date of Deposit. The Trustee has agreed to pay any
amounts necessary to cover any such excess and will be reimbursed therefor,
without interest, when funds become available from interest payments on the
Securities deposited in that Trust.
Payments received in respect of mortgages underlying Ginnie Maes in each series
of a GNMA Portfolio will consist of a portion representing interest and a
portion representing principal. Although the aggregate monthly payment made by
the obligor on each mortgage remains constant (aside from optional prepayments
of principal), in the early years most of each such payment will represent
interest, while in later years, the proportion representing interest will
decline and the proportion representing principal will increase. However, by
reason of optional prepayments, principal payments in the earlier years on
mortgages underlying Ginnie Maes may be substantially in excess of those
required by the amortization schedules of such mortgages. Therefore, principal
payments in later years may be substantially less since the aggregate unpaid
principal balances of such underlying mortgages may have been greatly reduced.
To the extent that the underlying mortgages bearing higher interest rates in a
GNMA Portfolio are prepaid faster than the other underlying mortgages, the net
annual interest rate per Unit and the Estimated Current Return on the Units of a
GNMA Portfolio can be expected to decline. Monthly payments to the Unitholders
of a GNMA Portfolio will reflect all of these factors.
MARKET FOR UNITS
After the initial offering period, while not obligated to do so, the Sponsor
intends to, and certain of the Underwriters may, subject to change at any time,
maintain a market for Units of the Trust Funds offered hereby and to
continuously offer to purchase said Units at prices, determined by the
Evaluator, based on the aggregate bid prices of the underlying Securities in
such Trusts, together with accrued interest to the expected dates of settlement.
To the extent that a market is maintained during the initial offering period,
the prices at which Units will be repurchased will be based upon the aggregate
offering side evaluation of the Securities in the Trusts. The aggregate bid
prices of the underlying Securities in each Trust are expected to be less than
the related aggregate offering prices (which is the evaluation method used
during the initial public offering period). Accordingly, Unitholders who wish
to dispose of their Units should inquire of their bank or broker as to current
market prices in order to determine whether there is in existence any price in
excess of the Redemption Price and, if so, the amount thereof.
The offering price of any Units resold by the Sponsor or Underwriters will be in
accord with that described in the currently effective Prospectus describing such
Units. Any profit or loss resulting from the resale of such Units will belong
to the Sponsor and/or the Underwriters. The Sponsor and/or the Underwriters may
suspend or discontinue purchases of Units of any Trust if the supply of Units
exceeds demand, or for other business reasons.
REDEMPTION
A Unitholder who does not dispose of Units in the secondary market described
above may cause Units to be redeemed by the Trustee by making a written request
to the Trustee, The Bank of New York, 101 Barclay Street, New York, New York
10286, and, in the case of Units evidenced by a certificate, by tendering such
certificate to the Trustee, properly endorsed or accompanied by a written
instrument or instruments of transfer in a form satisfactory to the Trustee.
Unitholders must sign the request, and such certificate or transfer instrument,
exactly as their names appear on the records of the Trustee and on any
certificate representing the Units to be redeemed. If the amount of
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<PAGE>
the redemption is $500 or less and the proceeds are payable to the Unitholder(s)
of record at the address of record, no signature guarantee is necessary for
redemptions by individual account owners (including joint owners). Additional
documentation may be requested, and a signature guarantee is always required,
from corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program ("STAMP") or such other guarantee
program in addition to, or in substitution for, STAMP, as may be accepted by the
Trustee. A certificate should only be sent by registered or certified mail for
the protection of the Unitholder. Since tender of the certificate is required
for redemption when one has been issued, Units represented by a certificate
cannot be redeemed until the certificate representing such Units has been
received by the purchasers.
Redemption shall be made by the Trustee on the third business day following the
day on which a tender for redemption is received (the "Redemption Date") by
payment of cash equivalent to the Redemption Price for such Trust, determined as
set forth below under "Computation of Redemption Price," as of the evaluation
time stated under "Essential Information," next following such tender,
multiplied by the number of Units being redeemed. Any Units redeemed shall be
canceled and any undivided fractional interest in the Trust extinguished. The
price received upon redemption might be more or less than the amount paid by the
Unitholder depending on the value of the Securities in the Trust at the time of
redemption.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a certain percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's tax
identification number in the manner required by such regulations. Any amount so
withheld is transmitted to the Internal Revenue Service and may be recovered by
the Unitholder only when filing a tax return. Under normal circumstances the
Trustee obtains the Unitholder's tax identification number from the selling
broker. However, any time a Unitholder elects to tender Units for redemption,
such Unitholder should make sure that the Trustee has been provided a certified
tax identification number in order to avoid this possible "back-up withholding."
In the event the Trustee has not been previously provided such number, one must
be provided at the time redemption is requested.
Any amounts paid on redemption representing interest shall be withdrawn from the
Interest Account for such Trust to the extent that funds are available for such
purpose. All other amounts paid on redemption shall be withdrawn from the
Principal Account for such Trust. The Trustee is empowered to sell Securities
for a Trust in order to make funds available for the redemption of Units of such
Trust. Such sale may be required when Securities would not otherwise be sold
and might result in lower prices than might otherwise be realized. To the
extent Securities are sold, the size and diversity of a Trust will be reduced.
In the case of a U.S. Treasury Portfolio or a GNMA Portfolio, Securities will be
sold by the Trustee so as to maintain, as closely as practicable, the original
percentage relationship between the principal amounts of the Securities in such
Trusts. The Securities to be sold for purposes of redeeming Units will be
selected from a list supplied by the Sponsor. The Securities will be chosen for
this list by the Sponsor on the basis of such market and credit factors as it
may determine are in the best interests of such Trusts. Provision is made under
the related Trust Agreements for the Sponsor to specify minimum face amounts in
which blocks of Securities are to be sold in order to obtain the best price
available. While such minimum amounts may vary from time to time in accordance
with market conditions, it is anticipated that the minimum face amounts which
would be specified would range from $25,000 to $100,000. Sales may be required
at a time when the Securities would not otherwise be sold and might result in
lower prices than might otherwise be realized. Moreover, due to the minimum
principal amount in which U.S. Treasury Obligations and Ginnie Maes may be
required to be sold, the proceeds of such sales may exceed the amount necessary
for payment of Units redeemed. To the extent not used to meet
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<PAGE>
other redemption requests in such Trusts, such excess proceeds will be
distributed pro rata to all remaining Unitholders of record of such Trusts,
unless reinvested in substitute Securities. See "General Information-Investment
Supervision."
The Trustee is irrevocably authorized in its discretion, if an Underwriter does
not elect to purchase any Unit tendered for redemption, in lieu of redeeming
such Units, to sell such Units in the over-the-counter market for the account of
tendering Unitholders at prices which will return to the Unitholders amounts in
cash, net after brokerage commissions, transfer taxes and other charges, equal
to or in excess of the Redemption Price for such Units. In the event of any
such sale, the Trustee shall pay the net proceeds thereof to the Unitholders on
the day they would otherwise be entitled to receive payment of the Redemption
Price.
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or during which (as determined by the Securities
and Exchange Commission) trading on the New York Stock Exchange is restricted;
(2) for any period during which an emergency exists as a result of which
disposal by the Trustee of Securities is not reasonably practicable or it is not
reasonably practicable to fairly determine the value of the underlying
Securities in accordance with the Trust Agreements; or (3) for such other period
as the Securities and Exchange Commission may by order permit. The Trustee is
not liable to any person in any way for any loss or damage which may result from
any such suspension or postponement.
Computation of Redemption Price. The Redemption Price for Units of each Trust
is computed by the Evaluator as of the evaluation time stated under "Essential
Information" next occurring after the tendering of a Unit for redemption and on
any other business day desired by it, by:
A. adding: (1) the cash on hand in the Trust other than cash deposited in the
Trust to purchase Securities not applied to the purchase of such Securities;
(2) the aggregate value of each issue of the Securities (including "when
issued" contracts, if any) held in the Trust as determined by the Evaluator
on the basis of bid prices therefor; and (3) interest accrued and unpaid on
the Securities in the Trust as of the date of computation;
B. deducting therefrom (1) amounts representing any applicable taxes or
governmental charges payable out of the Trust and for which no deductions
have been previously made for the purpose of additions to the Reserve Account
described under "General Information-Expenses of the Trusts"; (2) an amount
representing estimated accrued expenses of the Trust, including but not
limited to fees and expenses of the Trustee (including legal and auditing
fees and any insurance costs), the Evaluator, the Sponsor and bond counsel,
if any; (3) cash held for distribution to Unitholders of record as of the
business day prior to the evaluation being made; and (4) other liabilities
incurred by the Trust; and
C. finally dividing the results of such computation by the number of Units of
the Trust outstanding as of the date thereof.
UNITHOLDERS
Ownership of Units. Ownership of Units of any Trust will not be evidenced by
certificates unless a Unitholder, the Unitholder's registered broker/dealer or
the clearing agent for such broker/dealer makes a written request to the
Trustee. Certificates, if issued, will be so noted on the confirmation
statement sent to the Underwriter and broker. Non-receipt of such
certificate(s) must be reported to the Trustee within one year; otherwise, a 2%
surety bond fee will be required for replacement.
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Units are transferable by making a written request to the Trustee and, in the
case of Units evidenced by a certificate, by presenting and surrendering such
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer which should be sent registered or
certified mail for the protection of the Unitholder. Unitholders must sign such
written request, and such certificate or transfer instrument, exactly as their
names appear on the records of the Trustee and on any certificate representing
the Units to be transferred. Such signatures must be guaranteed by a
participant in the Securities Transfer Agents Medallion Program ("STAMP") or
such other signature guarantee program in addition to, or in substitution for,
STAMP, as may be accepted by the Trustee.
Units may be purchased and certificates, if requested will be issued in
denominations of one Unit subject to each Trust's minimum investment requirement
of 100 Units or any whole Unit multiple thereof subject to any minimum
requirement established by the Sponsor from time to time. Any certificate
issued will be numbered serially for identification, issued in fully registered
form and will be transferable only on the books of the Trustee. The Trustee may
require a Unitholder to pay a reasonable fee, to be determined in the sole
discretion of the Trustee, for each certificate re-issued or transferred and to
pay any governmental charge that may be imposed in connection with each such
transfer or interchange. The Trustee at the present time does not intend to
charge for the normal transfer or interchange of certificates. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity (generally amounting to 3% of the market value
of the Units), affidavit of loss, evidence of ownership and payment of expenses
incurred.
Distributions to Unitholders. Interest received by each Trust, including any
portion of the proceeds from a disposition of Securities which represents
accrued interest, is credited by the Trustee to the Interest Account for such
Trust. All other receipts are credited by the Trustee to a separate Principal
Account for the Trust. The Trustee normally has no cash for distribution to
Unitholders until it receives interest payments on the Securities in the Trust.
Since interest usually is paid semiannually (monthly in the case of a GNMA
Portfolio), during the initial months of the Trusts, the Interest Account of
each Trust, consisting of accrued but uncollected interest and collected
interest (cash), will be predominantly the uncollected accrued interest that is
not available for distribution. On the dates set forth under "Essential
Information" for each Trust, the Trustee will commence distributions, in part
from funds advanced by the Trustee.
Thereafter, assuming the Trust retains its original size and composition, after
deduction of the fees and expenses of the Trustee, the Sponsor and Evaluator and
reimbursements (without interest) to the Trustee for any amounts advanced to a
Trust, the Trustee will normally distribute on each Interest Distribution Date
(the fifteenth of the month) or shortly thereafter to Unitholders of record of
such Trust on the preceding Record Date (which is the first day of each month).
Unitholders of the Trusts will receive an amount substantially equal to one-
twelfth of such holders' pro rata share of the estimated net annual interest
income to the Interest Account of such Trust. However, interest earned at any
point in time will be greater than the amount actually received by the Trustee
and distributed to the Unitholders. Therefore, there will always remain an item
of accrued interest that is added to the daily value of the Units. If
Unitholders of a Trust sell or redeem all or a portion of their Units, they will
be paid their proportionate share of the accrued interest of such Trust to, but
not including, the third business day after the date of a sale or to the date of
tender in the case of a redemption.
In order to equalize distributions and keep the undistributed interest income of
the Trusts at a low level, all Unitholders of record in such Trust on the first
Record Date will receive an interest distribution on the first Interest
Distribution Date. Because the period of time between the first Interest
Distribution Date and the regular distribution dates may not be a full period,
the first regular distributions may be partial distributions.
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Unitholders of a U.S. Treasury Portfolio which contains Stripped Treasury
Securities should note that Stripped Treasury Securities are sold at a deep
discount because the buyer of those securities obtains only the right to receive
a future fixed payment on the security and not any rights to periodic interest
payments thereon. Purchasers of these Securities acquire, in effect, discount
obligations that are economically identical to the "zero-coupon bonds" that have
been issued by corporations. Zero coupon bonds are debt obligations which do
not make any periodic payments of interest prior to maturity and accordingly are
issued at a deep discount. Under generally accepted accounting principles, a
holder of a security purchased at a discount normally must report as an item of
income for financial accounting purposes the portion of the discount
attributable to the applicable reporting period. The calculation of this
attributable income would be made on the "interest" method which generally will
result in a lesser amount of includible income in earlier periods and a
correspondingly larger amount in later periods. For Federal income tax
purposes, the inclusion will be on a basis that reflects the effective
compounding of accrued but unpaid interest effectively represented by the
discount. Although this treatment is similar to the "interest" method described
above, the "interest" method may differ to the extent that generally accepted
accounting principles permit or require the inclusion of interest on the basis
of a compounding period other than the semi-annual period. See "Federal Tax
Status" for the U.S. Treasury Portfolios, if any.
Persons who purchase Units between a Record Date and a Distribution Date will
receive their first distribution on the second Distribution Date following their
purchase of Units. Since interest on Bonds in the Trusts is payable at varying
intervals, usually in semi-annual installments, and distributions of income are
made to Unitholders at different intervals from receipt of interest, the
interest accruing to a Trust may not be equal to the amount of money received
and available for distribution from the Interest Account. Therefore, on each
Distribution Date the amount of interest actually deposited in the Interest
Account of a Trust and available for distribution may be slightly more or less
than the interest distribution made. In order to eliminate fluctuations in
interest distributions resulting from such variances, the Trustee is authorized
by the Trust Agreements to advance such amounts as may be necessary to provide
interest distributions of approximately equal amounts. The Trustee will be
reimbursed, without interest, for any such advances from funds available in the
Interest Account for such Trust.
The Trustee will distribute on each Distribution Date or shortly thereafter, to
each Unitholder of record of a Trust on the preceding Record Date, an amount
substantially equal to such holder's pro rata share of the cash balance, if any,
in the Principal Account of such Trust computed as of the close of business on
the preceding Record Date. However, no distribution will be required if the
balance in the Principal Account is less than $.01 per Unit. Notwithstanding
the foregoing, the Trustee will make a distribution to Unitholders of all
principal relating to maturing U.S. Treasury Obligations in any U.S. Treasury
Portfolio or GNMA Portfolio within twelve business days of the date of such
maturity.
In connection with GNMA Portfolios only, the terms of the Ginnie Maes provide
for payment to the holders thereof (including a GNMA Portfolio) on the fifteenth
day of each month of amounts collected by or due to the issuers thereof with
respect to the underlying mortgages during the preceding month. The Trustee
will collect the interest due a GNMA Portfolio on the Securities therein as it
becomes payable and credit such interest to a separate Interest Account for such
GNMA Portfolio created by the Indenture. Distributions will be made to each
Unitholder of record of a GNMA Portfolio on the appropriate Distribution Date
(see "Essential Information") and will consist of an amount substantially equal
to such Unitholder's pro rata share of the cash balances, if any, in the
Interest Account, the Principal Account and any Capital Gains Account of such
GNMA Portfolio, computed as of the close of business on the preceding Record
Date.
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Statements to Unitholders. With each distribution, the Trustee will furnish or
cause to be furnished to each Unitholder a statement of the amount of interest
and the amount of other receipts, if any, which are being distributed, expressed
in each case as a dollar amount per Unit.
The accounts of each Trust are required to be audited annually, at the Trust's
expense, by independent auditors designated by the Sponsor, unless the Sponsor
determines that such an audit would not be in the best interest of the
Unitholders of such Trust. The accountants' report will be furnished by the
Trustee to any Unitholder of such Trust upon written request. Within a
reasonable period of time after the end of each calendar year, the Trustee shall
furnish to each person who at any time during the calendar year was a Unitholder
of a Trust a statement, covering the calendar year, setting forth for the
applicable Trust:
A. As to the Interest Account:
1. The amount of interest received on the Securities (and for Tax-Exempt
Portfolios, the percentage of such amount by states and territories in which
the issuers of such Securities are located);
2. The amount paid from the Interest Account representing accrued interest
of any Units redeemed;
3. The deductions from the Interest Account for applicable taxes, if any,
fees and expenses (including auditing fees) of the Trustee, the Sponsor, the
Evaluator, and, if any, of bond counsel;
4. Any amounts credited by the Trustee to the Reserve Account described under
"General Information- Expenses of the Trusts";
5. The net amount remaining after such payments and deductions, expressed
both as a total dollar amount and a dollar amount per Unit outstanding on
the last business day of such calendar year; and
B. As to the Principal Account:
1. The dates of the maturity, liquidation or redemption of any of the
Securities and the net proceeds received therefrom excluding any portion
credited to the Interest Account;
2. The amount paid from the Principal Account representing the principal
of any Units redeemed;
3. The deductions from the Principal Account for payment of applicable
taxes, if any, fees and expenses (including auditing fees) of the Trustee,
the Sponsor, the Evaluator, and, if any, of bond counsel;
4. The amount of when-issued interest treated as a return of capital, if any;
5. Any amounts credited by the Trustee to the Reserve Account described under
"General Information- Expenses of the Trusts";
6. The net amount remaining after distributions of principal and deductions,
expressed both as a dollar amount and as a dollar amount per Unit outstanding
on the last business day of the calendar year; and
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C. The following information:
1. A list of the Securities as of the last business day of such calendar
year;
2. The number of Units outstanding on the last business day of such calendar
year;
3. The Redemption Price based on the last evaluation made during such
calendar year;
4. The amount actually distributed during such calendar year from the
Interest and Principal Accounts (and Capital Gains Account, if applicable)
separately stated, expressed both as total dollar amounts and as dollar
amounts per Unit outstanding on the Record Dates for each such distribution.
Rights of Unitholders. A Unitholder may at any time tender Units to the Trustee
for redemption. The death or incapacity of any Unitholder will not operate to
terminate a Trust nor entitle legal representatives or heirs to claim an
accounting or to bring any action or proceeding in any court for partition or
winding up of a Trust.
No Unitholder shall have the right to control the operation and management of
any Trust in any manner, except to vote with respect to the amendment of the
Trust Agreements or termination of any Trust.
INVESTMENT SUPERVISION
The Sponsor may not alter the portfolios of the Trusts by the purchase, sale or
substitution of Securities, except in the special circumstances noted below and
as indicated earlier under "General Information- Trust Information" regarding
the substitution of Replacement Securities for any Failed Securities. Thus,
with the exception of the redemption or maturity of Securities in accordance
with their terms, the assets of the Trusts will remain unchanged under normal
circumstances.
The Sponsor may direct the Trustee to dispose of Securities the value of which
has been affected by certain adverse events including institution of certain
legal proceedings or decline in price or the occurrence of other market factors,
including advance refunding, so that in the opinion of the Sponsor the retention
of such Securities in a Trust would be detrimental to the interest of the
Unitholders. The proceeds from any such sales, exclusive of any portion which
represents accrued interest, will be credited to the Principal Account of such
Trust for distribution to the Unitholders.
The Sponsor is required to instruct the Trustee to reject any offer made by an
issuer of Securities to issue new obligations in exchange or substitution for
any of such Securities pursuant to a refunding financing plan, except that the
Sponsor may instruct the Trustee to accept or reject such an offer or to take
any other action with respect thereto as the Sponsor may deem proper if (1) the
issuer is in default with respect to such Securities or (2) in the written
opinion of the Sponsor the issuer will probably default with respect to such
Securities in the reasonably foreseeable future. Any obligation so received in
exchange or substitution will be held by the Trustee subject to the terms and
conditions of the Trust Agreement to the same extent as Securities originally
deposited thereunder. Within five days after deposit of obligations in exchange
or substitution for underlying Securities, the Trustee is required to give
notice thereof to each Unitholder, identifying the Securities eliminated and the
Securities substituted therefor.
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.
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ADMINISTRATION OF THE TRUSTS
The Trustee. The Trustee is The Bank of New York, a trust company organized
under the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286, telephone 1-800-701-8178. The Bank of New
York is subject to supervision and examination by the Superintendent of Banks of
the State of New York and the Board of Governors of the Federal Reserve System,
and its deposits are insured by the Federal Deposit Insurance Corporation to the
extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not participated in
selecting the portfolio of any Trust. For information relating to the
responsibilities of the Trustee under the Trust Agreements, reference is made to
the material set forth under "General Information-Unitholders."
In accordance with the Trust Agreements, the Trustee shall keep records of all
transactions at its office. Such records shall include the name and address of,
and the number of Units held by, every Unitholder of each Trust. Such books and
records shall be open to inspection by any Unitholder of such Trust at all
reasonable times during usual business hours. The Trustee shall make such
annual or other reports as may from time to time be required under any
applicable state or Federal statute, rule or regulation. The Trustee shall keep
a certified copy or duplicate original of the Trust Agreements on file in its
office available for inspection at all reasonable times during usual business
hours by any Unitholder, together with a current list of the Securities held in
each Trust. Pursuant to the Trust Agreements, the Trustee may employ one or
more agents for the purpose of custody and safeguarding of Securities comprising
the Trusts.
Under the Trust Agreements, the Trustee or any successor trustee may resign and
be discharged of its duties created by the Trust Agreements by executing an
instrument in writing and filing the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the notice of resignation
to all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may at any time remove the Trustee,
with or without cause, and appoint a successor trustee as provided in the Trust
Agreements. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original Trustee shall vest in the successor. The Trustee
shall be a corporation organized under the laws of the United States, or any
state thereof, which is authorized under such laws to exercise trust powers.
The Trustee shall have at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
The Evaluator. Ranson & Associates, Inc., the Sponsor, also serves as
Evaluator. The Evaluator may resign or be removed by the Trustee in which event
the Trustee is to use its best efforts to appoint a satisfactory successor.
Such resignation or removal shall become effective upon acceptance of
appointment by the successor evaluator. If upon resignation of the Evaluator no
successor has accepted appointment within 30 days after notice of resignation,
the Evaluator may apply to a court of competent jurisdiction for the appointment
of a successor. Notice of such resignation or removal and appointment shall be
mailed by the Trustee to each Unitholder. At the present time, pursuant to a
contract with the Evaluator, Muller Data Corporation, a non-affiliated firm
regularly engaged in the business of evaluating, quoting or appraising
comparable securities, provides, for both the initial offering period and
secondary
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market transactions, portfolio evaluations of the Securities in the Trusts which
are then reviewed by the Evaluator. In the event the Sponsor is unable to
obtain current evaluations from Muller Data Corporation, it may make its own
evaluations or it may utilize the services of any other non-affiliated evaluator
or evaluators it deems appropriate.
Amendment and Termination. The Trust Agreements may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or (3)
to make such provisions as shall not adversely affect the interests of the
Unitholders. The Trust Agreements with respect to the Trusts may also be
amended in any respect by the Sponsor and the Trustee, or any of the provisions
thereof may be waived, with the consent of the holders of Units representing 66
2/3% of the Units then outstanding of such Trust, provided that no such
amendment or waiver will reduce the interest of any Unitholder thereof without
the consent of such Unitholder or reduce the percentage of Units required to
consent to any such amendment or waiver without the consent of all Unitholders
of such Trust. In no event shall any Trust Agreement be amended to increase the
number of Units of a Trust issuable thereunder or to permit, except in
accordance with the provisions of such Trust Agreement, the acquisition of any
Securities in addition to or in substitution for those initially deposited in a
Trust. The Trustee shall promptly notify Unitholders of the substance of any
such amendment.
The Trust Agreements provide that the Trusts shall terminate upon the maturity,
redemption or other disposition of the last of the Securities held in a Trust.
If the value of a Trust shall be less than the applicable minimum value stated
under "Essential Information," the Trustee may, in its discretion, and shall,
when so directed by the Sponsor, terminate the Trust. A Trust may be terminated
at any time by the holders of Units representing 66 2/3% of the Units thereof
then outstanding. In the event of termination of a Trust, written notice
thereof will be sent by the Trustee to all Unitholders of such Trust. Within a
reasonable period after termination, the Trustee will sell any Securities
remaining in such Trust and, after paying all expenses and charges incurred by
the Trust, will distribute to Unitholders thereof (upon surrender for
cancellation of certificates for Units, if issued) their pro rata share of the
balances remaining in the Interest and Principal Accounts (and Capital Gains
Account, if applicable) of such Trust.
Limitations on Liability. The Sponsor: The Sponsor is liable for the
performance of its obligations arising from its responsibilities under the Trust
Agreements, but will be under no liability to the Unitholders for taking any
action or refraining from any action in good faith pursuant to the Trust
Agreements or for errors in judgment, except in cases of its own gross
negligence, bad faith or willful misconduct. The Sponsor shall not be liable or
responsible in any way for depreciation or loss incurred by reason of the sale
of any Securities.
The Trustee: The Trust Agreements provide that the Trustee shall be under no
liability for any action taken in good faith in reliance upon prima facie
properly executed documents or for the disposition of monies, Securities or
certificates except by reason of its own negligence, bad faith or willful
misconduct, nor shall the Trustee be liable or responsible in any way for
depreciation or loss incurred by reason of the sale by the Trustee of any
Securities. In the event that the Sponsor shall fail to act, the Trustee may
act and shall not be liable for any such action taken by it in good faith. The
Trustee shall not be personally liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the interest
thereon. In addition, the Trust Agreements contain other customary provisions
limiting the liability of the Trustee.
The Evaluator: The Trustee and Unitholders may rely on any evaluation furnished
by the Evaluator and shall have no responsibility for the accuracy thereof. The
Trust Agreements provide that the determinations made by the
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Evaluator shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Evaluator shall be under no
liability to the Trustee or Unitholders for errors in judgment, but shall be
liable only for its gross negligence, lack of good faith or willful misconduct.
EXPENSES OF THE TRUSTS
The Sponsor will charge the Trusts a surveillance fee for services performed for
the Trusts in an amount not to exceed that amount set forth in "Essential
Information" but in no event will such compensation, when combined with all
compensation received from other unit investment trusts for which the Sponsor
both acts as sponsor and provides portfolio surveillance, exceed the aggregate
cost to the Sponsor for providing such services. Such fee shall be based on the
total number of Units of the related Trust outstanding as of the January Record
Date for any annual period. The Sponsor will receive a portion of the sales
commissions paid in connection with the purchase of Units and will share in
profits, if any, related to the deposit of Securities in the Trusts.
The Trustee receives for its services fees set forth under "Essential
Information." The Trustee fee which is calculated monthly is based on the
largest aggregate principal amount of Securities in a Trust at any time during
the period. In no event shall the Trustee be paid less than $2,000 per Trust in
any one year. Funds that are available for future distributions, redemptions
and payment of expenses are held in accounts which are non-interest bearing to
Unitholders and are available for use by the Trustee pursuant to normal trust
procedures; however, the Trustee is also authorized by the Trust Agreements to
make from time to time certain non-interest bearing advances to the Trusts.
During the first year the Trustee has agreed to lower its fees and absorb
expenses by the amount set forth under "Essential Information." The Trustee's
fee will not be increased in future years in order to make up this reduction in
the Trustee's fee. The Trustee's fee is payable on or before each Distribution
Date.
For evaluation of Securities in each Trust, the Evaluator shall receive a fee,
payable monthly, calculated on the basis of that annual rate set forth under
"Essential Information," based upon the largest aggregate principal amount of
Securities in such Trust at any time during such monthly period.
The Trustee's and Evaluator's fees are deducted first from the Interest Account
of a Trust to the extent funds are available and then from the Principal
Account. Such fees may be increased without approval of Unitholders by amounts
not exceeding a proportionate increase in the Consumer Price Index entitled "All
Services Less Rent of Shelter," published by the United States Department of
Labor, or any equivalent index substituted therefor. In addition, the Trustee's
fee may be periodically adjusted in response to fluctuations in short-term
interest rates (reflecting the cost to the Trustee of advancing funds to a Trust
to meet scheduled distributions).
Expenses incurred in the establishing of each Trust, including the cost of the
initial preparation of documents relating to such Trust (including the
Prospectus, Trust Agreement and certificates), federal and state registration
fees, the initial fees and expenses of the Trustee, legal and accounting
expenses, payment of closing fees and any other out-of-pocket expenses, will be
paid by such Trust and it is intended that such expenses be amortized over a
five year period or the life of the Trust if less than five years. The
following additional charges are or may be incurred by the Trusts: (a) fees for
the Trustee's extraordinary services; (b) expenses of the Trustee (including
legal and auditing expenses and insurance costs for Insured Trust Funds, but not
including any fees and expenses charged by any agent for custody and
safeguarding of Securities) and of bond counsel, if any; (c) various
governmental charges; (d) expenses and costs of any action taken by the Trustee
to protect a Trust or the rights and interests of the Unitholders; (e)
indemnification of the Trustee for any loss, liability or expense incurred by it
in the administration of a Trust not
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resulting from gross negligence, bad faith or willful misconduct on its part;
(f) indemnification of the Sponsor for any loss, liability or expense incurred
in acting in that capacity without gross negligence, bad faith or willful
misconduct; and (g) expenditures incurred in contacting Unitholders upon
termination of the Trusts. The fees and expenses set forth herein are payable
out of the appropriate Trust and, when owing to the Trustee, are secured by a
lien on such Trust. Fees or charges relating to a Trust shall be allocated to
each Trust in the same ratio as the principal amount of such Trust bears to the
total principal amount of all Trusts. Fees or charges relating solely to a
particular Trust shall be charged only to such Trust. Your Trust may pay the
expenses of updating its registration statement each year. Unit investment
trust sponsors have historically paid these expenses.
Fees and expenses of the Trusts shall be deducted from the Interest Account
thereof, or, to the extent funds are not available in such Account, from the
Principal Accounts. The Trustee may withdraw from the Principal Account or the
interest Account of any Trust such amounts, if any, as it deems necessary to
establish a reserve for any taxes or other governmental charges or other
extraordinary expenses payable out of the Trust. Amounts so withdrawn shall be
credited to a separate account maintained for a Trust known as the Reserve
Account and shall not be considered a part of the Trust when determining the
value of the Units until such time as the Trustee shall return all or any part
of such amounts to the appropriate account.
THE SPONSOR
Ranson & Associates, Inc., the Sponsor of the Trusts, is an investment banking
firm created in 1995 by a number of former owners and employees of Ranson
Capital Corporation. On November 26, 1996, Ranson & Associates, Inc. purchased
all existing unit investment trusts sponsored by EVEREN Securities, Inc.
Accordingly, Ranson & Associates Inc. is the successor sponsor to unit
investments trusts formerly sponsored by EVEREN Unit Investment Trusts, a
service of EVEREN Securities, Inc. Ranson & Associates, Inc. is also the
sponsor and successor sponsor of Series of The Kansas Tax-Exempt Trust and
Multi-State Series of The Ranson Municipal Trust. Ranson & Associates, Inc. is
the successor to a series of companies, the first of which was originally
organized in Kansas in 1935. During its history, Ranson & Associates, Inc. and
its predecessors have been active in public and corporate finance and have sold
bonds and unit investment trusts and maintained secondary market activities
relating thereto. At present, Ranson & Associates, Inc., which is a member of
the National Association of Securities Dealers, Inc., is the Sponsor to each of
the above-named unit investment trusts and serves as the financial advisor and
as an underwriter for issuers in the Midwest and Southwest, especially in
Kansas, Missouri and Texas. The Sponsor's offices are located at 250 North Rock
Road, Suite 150, Wichita, Kansas 67206-2241.
If at any time the Sponsor shall fail to perform any of its duties under the
Trust Agreements or shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or shall have its affairs taken over by public
authorities, then the Trustee may (a) appoint a successor sponsor at rates of
compensation deemed by the Trustee to be reasonable and not exceeding such
reasonable amounts as may be prescribed by the Securities and Exchange
Commission, or (b) terminate the Trust Agreements and liquidate the Trusts as
provided therein, or (c) continue to act as Trustee without terminating the
Trust Agreements.
The foregoing financial information with regard to the Sponsor relates to the
Sponsor only and not to these Trusts. Such information is included in this
Prospectus only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations with respect to the Trusts. More comprehensive financial
information can be obtained upon request from the Sponsor.
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LEGAL OPINIONS
The legality of the Units offered hereby and certain matters relating to Federal
tax law have been passed upon by Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The Statements of financial condition, including the Trust portfolios, of the
Trusts at the Initial Date of Deposit, appearing in this Prospectus and
Registration Statement have been audited by Allen, Gibbs & Houlik, L.C.,
independent auditors, as set forth in their report appearing elsewhere herein,
and are included in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Essential Information 2
The Trust Funds 5
The GNMA Portfolio 7
The U.S. Treasury Portfolio 15
Report of Independent Auditors 22
Statements of Financial Condition 23
General Information 24
Risk Factors 24
Public Offering of Units 25
Trust Information 31
Retirement Plans 34
Distribution Reinvestment 35
Interest, Estimated Long-Term Return
and Estimated Current Return 35
Market for Units 36
Redemption 36
Unitholders 38
Investment Supervision 42
Administration of the Trusts 43
Expenses of the Trusts 45
The Sponsor 46
Legal Opinions 47
Independent Auditors 47
</TABLE>
<PAGE>
- --------------------
RANSON
UNIT
INVESTMENT
TRUSTS
- --------------------
------------------------
PROSPECTUS JUNE 23, 1999
------------------------
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents.
The facing sheet
The Prospectus
The Signatures
The following exhibits.
1.1(a). Trust Agreement applicable to GNMA Portfolio, Series 12.
1.1(b). Trust Agreement applicable to U.S. Treasury Portfolio, Series 21.
1.1.1. Standard Terms and Conditions of Trust applicable to GNMA Portfolio,
Series 12 and U.S. Treasury Portflio, Series 21. Reference is made to
Exhibit 1.1.1 to EVEREN Unit Investment Trusts, Series 47 (File No.
333-03141) as filed on May 8, 1996.
2.1. Form of Certificate of Ownership (pages three and four of the Standard
Terms and Conditions of Trust included as Exhibit 1.1.1).
3.1. Opinion of counsel to the Sponsor as to legality of the securities
being registered including a consent to the use of its name under
"Legal Opinions" in the Prospectus.
3.2. Opinion of counsel to the Sponsor as to the tax status of the
securities being registered.
4.1. Consent of Independent Auditors.
4.2. Consent of Independent Evaluator.
S-1
<PAGE>
SIGNATURES
The Registrant, Ranson Unit Investment Trusts, Series 83, hereby identifies
Ranson Unit Investment Trusts, Series 53, Kemper Defined Funds, Series 9, Kemper
Defined Funds, Series 45, Kemper Defined Funds Insured National Series 1, Kemper
Insured Corporate Trust, Series 1, Kemper Tax-Exempt Insured Income Trust,
Multi-State Series 19, and Kemper Government Securities Trust, Series 39 (GNMA
Portfolio), Series 40 (GNMA Portfolio) and Series 41 (U.S. Treasury Portfolio)
for purposes of the representations required by Rule 487 and represents the
following: (1) that the portfolio securities deposited in the series as to the
securities of which this Registration Statement is being filed do not differ
materially in type or quality from those deposited in such previous series; (2)
that, except to the extent necessary to identify the specific portfolio
securities deposited in, and to provide essential financial information for, the
series with respect to the securities of which this Registration Statement is
being filed, this Registration Statement does not contain disclosures that
differ in any material respect from those contained in the registration
statements for such previous series as to which the effective date was
determined by the Commission or the staff; and (3) that it has complied with
Rule 460 under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ranson Unit Investment Trusts, Series 83 has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in the City of Wichita, and State of Kansas, on the
23rd day of June, 1999.
RANSON UNIT INVESTMENT TRUSTS, SERIES 83,
Registrant
By: RANSON & ASSOCIATES, INC.,
Depositor
By: ALEX R. MEITZNER
---------------------------------------
Alex R. Meitzner
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1
to the Registration Statement has been signed below on June 23, 1999 by the
following persons, who constitute a majority of the Board of Directors of Ranson
& Associates, Inc.
SIGNATURE TITLE
- ---------------------- -----------------------
DOUGLAS K. ROGERS Executive Vice )
- ---------------------- President and Director )
Douglas K. Rogers
ALEX R. MEITZNER Chairman of the Board )
- ---------------------- of Directors )
Alex R. Meitzner
ROBIN K. PINKERTON President, Secretary, )
- ---------------------- Treasurer and Director ) ALEX R. MEITZNER
Robin K. Pinkerton -----------------------
Alex R. Meitzner
- -------------------------------------------------------------------------------
An executed copy of each of the related powers of attorney was filed with the
Securities and Exchange Commission in connection with the Registration Statement
on Form S-6 of The Kansas Tax-Exempt Trust, Series 51 (File No. 33-46376) and
Series 52 (File No. 33-47687) and the same are hereby incorporated herein by
this reference.
S-2
EXHIBIT 1.1(a)
RANSON UNIT INVESTMENT TRUSTS, SERIES 83
TRUST AGREEMENT
Dated: June 23, 1999
This Trust Agreement between Ranson & Associates, Inc., as Depositor and
Evaluator, and The Bank of New York, as Trustee, sets forth certain provisions
in full and incorporates other provisions by reference to the document entitled
"Standard Terms and Conditions of Trust for Government Securities Trusts
Sponsored by EVEREN Unit Investment Trusts, a service of EVEREN Securities,
Inc., Effective: May 8, 1996" (herein called the "Standard Terms and Conditions
of Trust") and such provisions as are set forth in full and such provisions as
are incorporated by reference constitute a single instrument. All references
herein to Articles and Sections are to Articles and Sections of the Standard
Terms and Conditions of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee and the Evaluator agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the Provisions of Part II hereof, all the provisions contained
in the Standard Terms and Conditions of Trust are herein incorporated by
reference in their entirety and shall be deemed to be a part of this instrument
as fully and to the same extent as though said provisions had been set forth in
full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Securities defined in Section 1.01(15), listed in Schedule A
hereto, have been deposited in trust under this Trust Agreement.
(b) The fractional undivided interest in and ownership of each Trust
Fund represented by each Unit is the amount set forth under "Essential
Information-Fractional Undivided Interest per Unit" in the Prospectus.
(c) The number of Units in each Trust is that amount set forth under
"Essential Information-Number of Units" in the Prospectus.
(d) The "First General Record Date" shall be the first "Record Date"
set forth under "Essential Information" in the Prospectus.
-1-
<PAGE>
(e) The amount of the second distribution of funds from the Interest
Account shall be that amount set forth under "Essential Information-
Interest Payments-First Payment per Unit" for each Trust in the Prospectus.
(f) The term "Trust" as defined in Section 1.01(17) shall include
"GNMA Portfolio, Series 12" as defined in the Prospectus.
(g) Sections 1.01(4) and (6) shall be replaced with the following:
(4) "Depositor" shall mean Ranson & Associates, Inc. and its
successors in interest, or any successor depositor appointed as
hereinafter provided.
(6) "Evaluator" shall mean Ranson & Associates, Inc. and its
successors in interest, or any successor evaluator appointed as
hereinafter provided.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed.
RANSON & ASSOCIATES, INC.,
Depositor and Evaluator
By /s/ ROBIN K. PINKERTON
---------------------------
President
THE BANK OF NEW YORK,
Trustee
By /s/ Jeffrey Bieselin
---------------------------
Vice President
<PAGE>
SCHEDULE A
SECURITIES INITIALLY DEPOSITED
RANSON UNIT INVESTMENT TRUSTS, SERIES 83
(Note: Incorporated herein and made a part hereof is the "Portfolio" as
set forth in the Prospectus for the Trust.)
EXHIBIT 1.1(b)
RANSON UNIT INVESTMENT TRUSTS, SERIES 83
TRUST AGREEMENT
Dated: June 23, 1999
This Trust Agreement between Ranson & Associates, Inc., as Depositor and
Evaluator, and The Bank of New York, as Trustee, sets forth certain provisions
in full and incorporates other provisions by reference to the document entitled
"Standard Terms and Conditions of Trust for Government Securities Sponsored by
EVEREN Unit Investment Trusts, a service of EVEREN Securities, Inc., Effective:
May 8, 1996" (herein called the "Standard Terms and Conditions of Trust") and
such provisions as are set forth in full and such provisions as are incorporated
by reference constitute a single instrument. All references herein to Articles
and Sections are to Articles and Sections of the Standard Terms and Conditions
of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee and the Evaluator agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the Provisions of Part II hereof, all the provisions contained
in the Standard Terms and Conditions of Trust are herein incorporated by
reference in their entirety and shall be deemed to be a part of this instrument
as fully and to the same extent as though said provisions had been set forth in
full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Securities defined in Section 1.01(15), listed in Schedule A
hereto, have been deposited in trust under this Trust Agreement.
-1-
<PAGE>
(b) The fractional undivided interest in and ownership of each Trust
Fund represented by each Unit is the amount set forth under "Essential
Information-Fractional Undivided Interest per Unit" in the Prospectus.
(c) The number of Units in each Trust is that amount set forth under
"Essential Information-Number of Units" in the Prospectus.
(d) The "First General Record Date" shall be the first "Record Date"
set forth under "Essential Information" in the Prospectus.
(e) The amount of the second distribution of funds from the Interest
Account shall be that amount set forth under "Essential Information-
Interest Payments-First Payment per Unit" for each Trust in the Prospectus.
(f) The term "Trust" as defined in Section 1.01(17) shall include
"U.S. Treasury Portfolio, Series 21" as defined in the Prospectus.
(g) Sections 1.01(4) and (6) shall be replaced with the following:
(4) "Depositor" shall mean Ranson & Associates, Inc. and its
successors in interest, or any successor depositor appointed as
hereinafter provided.
(6) "Evaluator" shall mean Ranson & Associates, Inc. and its
successors in interest, or any successor evaluator appointed as
hereinafter provided.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed.
RANSON & ASSOCIATES, INC.,
Depositor and Evaluator
By /s/ ROBIN K. PINKERTON
___________________________
President
THE BANK OF NEW YORK,
Trustee
By /s/ Jeffrey Bieselin
___________________________
Vice President
<PAGE>
SCHEDULE A
SECURITIES INITIALLY DEPOSITED
RANSON UNIT INVESTMENT TRUSTS, SERIES 83
(Note: Incorporated herein and made a part hereof is the "Portfolio" as
set forth in the Prospectus for the Trust.)
EXHIBIT 3.1
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
June 23, 1999
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Re: Ranson Unit Investment Trusts Series 83
---------------------------------------
Gentlemen:
We have served as counsel for Ranson & Associates, Inc., as Sponsor and
Depositor of Ranson Unit Investment Trusts Series 83 (the "Fund"), in connection
with the preparation, execution and delivery of Trust Agreements dated the date
of this opinion between Ranson & Associates, Inc., as Depositor, and The Bank of
New York, as Trustee, pursuant to which the Depositor has delivered to and
deposited the Bonds listed in the Schedules to the Trust Agreements with the
Trustee and pursuant to which the Trustee has issued to or on the order of the
Depositor a certificate or certificates representing all the Units of fractional
undivided interest in, and ownership of, the Fund, created under said Trust
Agreements.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreements and the
execution and issuance of certificates evidencing the Units of the
Fund have been duly authorized; and
2. The certificates evidencing the Units of the Fund, when duly
executed and delivered by the Depositor and the Trustee in accordance
with the aforementioned Trust Agreements, will constitute valid and
binding obligations of the Fund and the Depositor in accordance with
the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-80105) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
EXHIBIT 3.2
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
June 23, 1999
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Ranson Unit Investment Trusts Series 83
U.S. Treasury Portfolio, Series 21
Gentlemen:
We have acted as counsel for Ranson Unit Investment Trusts, a service of
Ranson & Associates, Inc., Depositor of Ranson Unit Investment Trusts Series 83
(the "Fund") including U.S. Treasury Portfolio, Series 21 (the "Trust Fund"), in
connection with the issuance of Units of fractional undivided interest in the
Trust Fund, under a Trust Agreement, dated June 23, 1999 (the "Indenture"),
between Ranson & Associates, Inc., as Depositor, and The Bank of New York, as
Trustee.
In this connection, we have examined the Registration Statement, the form
of Prospectus proposed to be filed with the Securities and Exchange Commission,
the Indenture and such other instruments and documents as we have deemed
pertinent. The opinions expressed herein assume that each Trust will be
administered, and investments by a Trust from proceeds of subsequent deposits,
if any, will be made, in accordance with the terms of the Indenture. Each Trust
holds Treasury Obligations and may include "stripped U.S. treasury bonds" (the
"Stripped Treasury U.S. Securities").
Based upon the foregoing and upon an investigation of such matters of law
as we consider to be applicable we are of the opinion that, under existing
Federal income tax law:
(i) The Trust is not an association taxable as a corporation but will
be governed by the provisions of Subchapter J (relating to trusts) of
Chapter 1, Internal Revenue Code of 1986 (the "Code").
<PAGE>
-2-
(ii) Each Unitholder will be considered the owner of a pro rata
portion of each U.S. Treasury Obligation in the Trust and will be
considered to have received the interest on his pro rata portion of each
U.S. Treasury Obligation when interest on such U.S. Treasury Obligation is
received by the Trust. Each Unitholder will also be required to include in
taxable income for federal income tax purposes, original issue discount
with respect to his interest in any U.S. Treasury Obligation held by the
Trust which was issued with original issue discount at the same time and in
the same manner as though the Unitholder were the direct owner of such
interest. Original issue discount will be treated as zero with respect to
the U.S. Treasury Obligations if it is "de minimis" within the meaning of
Section 1273 of the Code and, based upon a Treasury Regulation (the
"Regulation") which was issued on December 28, 1992 regarding the stripped
bond rules of the Code, original issue discount with respect to a Stripped
Treasury Security will be treated as zero if it is "de minimis" as
determined thereunder.
(iii) Each Unitholder will be considered the owner of a pro rata
portion of each asset in the Trust. The total cost to a Unitholder of his
Units, including sales charges, is allocated among his pro rata portion of
each asset held by the Trust (in proportion to the fair market values
thereof on the valuation date closest to the date the Unitholder purchases
Units) in order to determine his initial tax basis for his pro rata portion
of each asset held by the Trust. The Stripped Treasury Securities are
treated as bonds that were originally issued at an original issue discount.
Because the Stripped Treasury Securities represent interests in "stripped"
U.S. Treasury bonds, a Unitholder's initial basis for his pro rata portion
of each Stripped Treasury Security held by the Trust (determined at the
time he acquires his Units, in the manner described above) shall be treated
as its "purchase price" by the Unitholder. Under the special rules
relating to stripped bonds, original issue discount applicable to the
Stripped Treasury Securities is effectively treated as interest for Federal
income tax purposes and the amount of original issue discount in this case
is generally the difference between the bond's purchase price and its
stated redemption price at maturity. A Unitholder will be required to
include in gross income for each taxable year the sum of his daily portions
of original issue discount attributable to the Stripped Treasury Securities
held by the Trust as such original issue discount accrues and will in
general be subject to Federal income tax with respect to the total amount
of such original issue discount that accrues for such year even though the
income is not distributed to the Unitholders during such year to the extent
it is greater than or equal to the "de minimis" amount described above. To
the extent the amount of such discount is less than the respective "de
minimis" amount, such discount shall be treated as zero. In general,
original issue discount accrues daily under a constant interest rate method
which takes into account the semi-annual compounding of accrued interest.
In the case of Stripped Treasury Securities this method will generally
result in an increasing amount of income to the Unitholders each year. A
Unitholder's tax basis for his pro rata portion of each asset held by the
Trust may be subject to adjustment as discussed in paragraph (v) hereof.
<PAGE>
-3-
(iv) The Unitholder's aliquot share of the total proceeds received on
the disposition of, or principal paid with respect to, a U.S. Treasury
Obligation held by the Trust will constitute ordinary income (which will be
treated as interest income for most purposes) to the extent it does not
exceed the accrued market discount on such U.S. Treasury Obligation that
has not previously been included in taxable income by such Unitholder. A
Unitholder may generally elect to include market discount in income as such
discount accrues. In general, market discount is the excess, if any, of
the Unitholder's pro rata portion of the outstanding principal balance of a
U.S. Treasury Obligation over the Unitholder's initial tax basis for such
pro rata portion, determined at the time such Unitholder acquires his
Units. However, market discount with respect to any U.S. Treasury
Obligation will generally be considered zero if it amounts to less than
.25% of the Obligation's stated redemption price at maturity times the
number of years to maturity. The market discount rules do not apply to
Stripped Treasury Securities because they are stripped debt instruments
subject to special original issue discount rules as discussed above. If a
Unitholder sells his Units, gain, if any, will constitute ordinary income
to the extent of the aggregate of the accrued market discount on the
Unitholder's pro rata portion of each U.S. Treasury Obligation that is held
by the Trust that has not previously been included in taxable income by
such Unitholder. In general, market discount accrues on a ratable basis
unless the Unitholder elects to accrue such discount on a constant interest
rate basis. However, no opinion is expressed herein regarding the precise
manner in which market discount accrues. The deduction by a Unitholder for
any interest expense incurred to purchase or carry Units will be reduced by
the amount of any accrued market discount that has not yet been included in
taxable income by such Unitholder. In general, the portion of any interest
expense which is not currently deducible would be ultimately deductible
when the accrued market discount is included in income.
(v) As discussed in paragraph (iv) hereof, if a Unitholder sells his
Units, gain, if any, will constitute ordinary income to the extent of the
aggregate of the accrued market discount (which has not previously been
included in such Unitholder's taxable income) with respect to the
Unitholder's pro rata portion of each U.S. Treasury Obligation held by the
Trust. Any other gains (or losses) will be capital gains (or losses)
except in the case of a dealer or a financial institution, and will be
long-term if the Unitholder has held his Units for more than one year. A
Unitholder will recognize taxable gains (or losses) (a) upon redemption or
sale of his Units, (b) if the Trustee disposes of an asset or (c) upon
receipt by the Trustee of payments of principal on the U.S. Treasury
Obligations. The amount of any such gain (or loss) is measured by
comparing the Unitholder's pro rata share of the total proceeds from the
transaction with his adjusted tax basis in his Units or his pro rata
interest in the asset as the case may be, and then reducing such gain, if
any, to the extent characterized as ordinary income resulting from accrued
market discount as discussed above. A Unitholder's tax basis in his Units
and his pro rata portion of each of the underlying assets of the Trust may
be adjusted to reflect the accrual of market discount (if the Unitholder
<PAGE>
-4-
has elected to include such discount in income as it accrues), original
issue discount and amortized bond premium, if any. The tax basis reduction
requirements of said Code relating to amortization of bond premium may,
under some circumstances, result in the Unitholder realizing a taxable gain
when his Units are sold or redeemed for an amount less than or equal to his
original cost. In addition, Unitholders must reduce the tax basis of their
Units and their pro rata portion of the underlying assets of the Trust for
their share of accrued interest received by the Trust, if any, on U.S.
Treasury Obligations delivered after the Unitholders pay for their Units to
the extent that such interest accrued on such U.S. Treasury Obligations
before the date the Trust acquired ownership of the U.S. Treasury
Obligations (and the amount of this reduction may exceed the amount of
accrued interest paid to the seller) and, consequently, such Unitholders
may have an increase in taxable gain or reduction in capital loss upon the
disposition of such Units or such U.S. Treasury Obligations.
(vi) The Code provides that "miscellaneous itemized deductions" are
allowable only to the extent that they exceed two percent of an individual
taxpayer's adjusted gross income. Miscellaneous itemized deductions
subject to this limitation under present law include a Unitholder's pro
rata share of expenses paid by the Trust, including fees of the Trustee and
the Evaluator but does not include amortizable bond premium on U.S.
Treasury Obligations held by the Trust.
The Code provides a complex set of rules governing the accrual of original
issue discount, including special rules relating to "stripped" debt instruments
such as the Stripped Treasury Securities. These rules provide that original
issue discount generally accrues on the basis of a constant compound interest
rate over the term of the Stripped Treasury Security. Special rules apply if
the purchase price of a U.S. Treasury Obligation exceeds its original issue
price plus the amount of original issue discount which would have previously
accrued, based upon its issue price (its "adjusted issue price"). Similarly,
these special rules would apply to a Unitholder if the tax basis of his pro rata
portion of a U.S. Treasury Obligation issued with original issue discount
exceeds his pro rata portion of its adjusted issue price. In addition, as
discussed above, the Regulation provides that the amount of original issue
discount on a stripped bond is considered zero if the actual amount of original
issue discount on such stripped bond as determined under Section 1286 of the
Code is less than a "de minims" amount, which the Regulation provides, is the
product of (i) 0.25 percent of the stated redemption price at maturity and (ii)
the number of full years from the date the stripped bond is purchased
(determined separately for each new purchaser thereof) to the final maturity
date of the bond.
A Unitholder who is a foreign investor (i.e., an investor other than a U.S.
citizen or resident or a U.S. corporation, partnership, estate or trust) will
not be subject to United States Federal income taxes, including withholding
taxes on interest income (including any original issue discount) on, or any gain
from the sale or other disposition of his pro rata interest in any U.S. Treasury
<PAGE>
-5-
Obligation held by the Trust or the sale of his Units provided that all of the
following conditions are met:
(i) the interest income or gain is not effectively connected with the
conduct by the foreign investor of a trade or business within the United
States;
(ii) with respect to any gain, the foreign investor (if an individual)
is not present in the United States for 183 days or more during his or her
taxable year;
(iii) the U.S. Treasury Obligation was issued after July 18, 1984; and
(iv) the foreign investor provides all certification which may be
required of his status and of the matters contained in clauses (i) and (ii)
above.
The "Revenue Reconciliation Act of 1993" (the "1993 Tax Act") raised tax
rates on ordinary income above rates at which capital gains are subject to tax
in certain circumstances. Because some of all capital gains are taxed at a
comparatively lower rate under the 1993 Tax Act, the 1993 Tax Act includes a
provision that recharacterizes capital gains as ordinary income in the case of
certain financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993.
The scope of this opinion is expressly limited to the matters set forth
herein, and, except as expressly set forth above, we express no opinion with
respect to any other taxes, including foreign, state or local taxes or
collateral tax consequences with respect to the purchase, ownership and
disposition of Units.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-80105) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EXHIBIT 4.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm as experts under the caption
"General Information-Independent Auditors" and to the use of our report dated
June 23, 1999 in Amendment No. 1 to the Registration Statement (Form S-6 File
No. 333-80105) and related Prospectus of Ranson Unit Investment Trusts, Series
83.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
June 23, 1999
EXHIBIT 4.2
MULLER DATA CORPORATION
395 HUDSON STREET
NEW YORK, NEW YORK 10014-3622
(212) 807-3800
June 23, 1999
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Re: RANSON UNIT INVESTMENT TRUST SERIES 83
Consisting of: U.S. Treasury Portfolio Series 21
GNMA Portfolio Series 12
Gentlemen:
We have examined the Registration Statement No. 333-80105 for the
referenced Trust and acknowledge that Muller Data Corporation is currently
acting as the evaluator for the Ranson Unit Investment Trust Series 83.
Subsequently, we hereby consent to the reference of Muller Data Corporation as
Trust evaluator.
You are hereby authorized to file a copy of this letter with the Securities
and Exchange Commission.
Sincerely,
MULLER DATA CORPORATION
By: RON VALINOTI
--------------------------------
Senior Vice President
Acknowledged and Agreed:
RANSON & ASSOCIATES, INC.
By:
