File No. 33-72026 CIK #915237
Securities and Exchange Commission
Washington, D. C. 20549
Post-Effective
Amendment No. 3
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
The Ranson Municipal Trust, Multi-State Series 2
(Exact Name of Trust)
Ranson & Associates, Inc.
(Exact Name of Depositor)
120 South Market Street, Suite 450
Wichita, Kansas 67202
(Complete address of Depositor's principal executive offices)
Ranson & Associates, Inc. Chapman and Cutler
Attn: John A. Ranson Attention: Mark J. Kneedy
120 South Market Street, Suite 450 111 West Monroe Street
Wichita, Kansas 67202 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become
effective on May 10, 1996 pursuant to paragraph (b) of Rule 485.
<TABLE>
<CAPTION>
THE NEBRASKA TAX-EXEMPT TRUST, SERIES 2
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
AS OF APRIL 18, 1996
SPONSOR AND EVALUATOR: RANSON & ASSOCIATES, INC.
TRUSTEE: INVESTORS FIDUCIARY TRUST COMPANY, KANSAS CITY, MISSOURI
<S> <C>
GENERAL INFORMATION
Principal Amount of Municipal Bonds $ 1,915,000
Number of Units 2,052
Fractional Undivided Interest in the Trust per Unit 1 / 2,052
Principal Amount of Municipal Bonds per Unit $ 933.24
Public Offering Price:
Aggregate Bid Price of Municipal Bonds in the Portfolio $ 1,779,583
Aggregate Bid Price of Municipal Bonds per Unit $ 867.24
Cash per Unit(1) $ __
Sales Charge 5.82% (5.50% of the Public Offering Price) $ 50.47
Public Offering Price per Unit (exclusive of accrued interest)(2) $ 917.71
Redemption Price per Unit (exclusive of accrued interest) $ 867.24
Excess of Public Offering Price per Unit Over Redemption Price per Unit $ 50.47
Minimum Value of the Trust under which Trust Agreement may be terminated $ 603,000
Original Date of Deposit: December 9, 1993
Mandatory Termination Date: December 31, 2043
Evaluations for purpose of sale, purchase or redemption of Units are made
as of 4:00 P.M. Central time on days of trading on the New York Stock
Exchange next following receipt of an order for a sale or purchase of
Units or receipt by the Trustee of Units tendered for redemption.
SPECIAL PER UNIT INFORMATION
Calculation of Estimated Net Annual Interest Income per Unit:(3)
Estimated Annual Interest Income $ 50.72
Less: Estimated Annual Expense $ 1.86
Estimated Net Annual Interest Income $ 48.86
Estimated Net Monthly Interest Distribution per Unit $ 4.07
Estimated Daily Rate of Net Interest Accrual per Unit $ .1357
Estimated Current Return Based on Public Offering Price(3) 5.32%
Trustee's Annual Fee $ 1.21 (including expenses) per $1,000 principal
amount of Bonds
Annual Evaluation Fee $.25 per $1,000 principal amount of Bonds
Annual Audit Fee Maximum of $0.50 per Unit
Record and Computation Dates FIFTEENTH day of each month
Distribution Dates FIRST day of each month
</TABLE>
[FN]
(1) This amount, if any, represents principal cash which is an asset of the
Trust and is included in the determination of the Public Offering Price.
(2) Units are offered at the Public Offering Price plus accrued interest to
the date of settlement (five business days after purchase). On April 18, 1996,
there was added to the Public Offering Price of $917.71 accrued interest to
the settlement date of April 23, 1996, of $1.09, for a total price of
$918.80 per Unit.
(3) The Estimated Current Return will vary with changes in the Public
Offering Price and there is no assurance that the Estimated Current Return
on the date hereof will be applicable on a subsequent date of purchase. The
Estimated Current Return is increased for transactions entitled to a reduced
sales charge (see "Estimated Current Return" - Part Two).
PROSPECTUS PART ONE
NOTE: Part One of this Prospectus may not be distributed
unless accompanied by Part Two.
Please retain both parts of this Prospectus for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE NEBRASKA TAX-EXEMPT TRUST
SERIES 2
FINANCIAL STATEMENTS
AND SCHEDULE OF INVESTMENTS
YEARS ENDED JANUARY 31, 1996, 1995 AND
THE PERIOD DECEMBER 9, 1993 (DATE OF DEPOSIT)
THROUGH JANUARY 31, 1994
WITH
INDEPENDENT AUDITORS' REPORT
<TABLE>
<CAPTION>
THE NEBRASKA TAX-EXEMPT TRUST
SERIES 2
FINANCIAL STATEMENTS AND SCHEDULE OF INVESTMENTS
YEARS ENDED JANUARY 31, 1996, 1995 AND
THE PERIOD DECEMBER 9, 1993 (DATE OF DEPOSIT)
THROUGH JANUARY 31, 1994
TABLE OF CONTENTS
<S> <C>
Page
Independent Auditors' Report on Financial Statements 1
Financial Statements:
Statement of Assets and Liabilities 2
Statements of Operations 3
Statements of Changes in Net Assets 4
Schedule of Investments and Notes 5-6
Notes to Financial Statements 7-9
</TABLE>
INDEPENDENT AUDITORS' REPORT
Unitholders
The Nebraska Tax-Exempt Trust
Series 2
We have audited the accompanying statement of assets and liabilities of
the Nebraska Tax-Exempt Trust, Series 2, including the schedule of
investments, as of January 31, 1996, and the related statements of operations
and changes in net assets for each of the two years in the period ended January
31, 1996 and for the period December 9, 1993 (Date of Deposit) through January
31, 1994. These financial statements are the responsibility of the Sponsor's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of January 31, 1996
by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Nebraska Tax-Exempt
Trust, Series 2 as of January 31, 1996, and the results of operations and
changes in net assets for each of the two years in the period ended January
31, 1996 and for the period December 9, 1993 (Date of Deposit) through
January 31, 1994, in conformity with generally accepted accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
April 26, 1996
<TABLE>
<CAPTION>
THE NEBRASKA TAX-EXEMPT TRUST
SERIES 2
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1996
<S> <C> <C>
ASSETS:
Municipal Bonds, at market value (cost $1,880,334) (Note 1) $1,824,416
Accrued interest receivable 33,963
__________
Total assets 1,858,379
__________
LIABILITIES AND NET ASSETS:
Accrued liabilities 2,174
Distributions payable to Unitholders 8,344
________
Total liabilities 10,518
________
Net assets, applicable to 2,052 Units outstanding (Note 5):
Cost of Trust assets, exclusive of interest (Note 1) $1,880,334
Unrealized depreciation (Note 2) (55,918)
Distributable funds 23,445
___________ __________
Net assets $1,847,861
__________
__________
Value per Unit (2,052 Units) $ 901
__________
__________
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
2
<TABLE>
<CAPTION>
THE NEBRASKA TAX-EXEMPT TRUST
SERIES 2
STATEMENTS OF OPERATIONS
<S> <C> <C> <C>
Period 12/9/93
Year Ended Year Ended (Date of Deposit)
1/31/96 1/31/95 through 1/31/94
__________ ____________ ________________
Investment income - interest $ 105,943 $ 126,963 $ 67,029
Expenses (Note 3):
Trustee's fees and related expenses 2,090 3,079 423
Evaluator's fees 695 754 109
Audit fees 1,026 1,607 237
_________ ________ ________
Total expenses 3,811 5,440 769
_________ ________ ________
Investment income - net 102,132 121,523 66,260
_________ ________ ________
Realized and unrealized gain (loss) on investments:
Net realized loss (11,705) (59,512)
Unrealized appreciation (depreciation) 152,569 (264,421) 55,933
_________ ________ ________
Net loss on investments 140,864 (323,933) 55,933
_________ ________ ________
Net increase (decrease) in net assets resulting
from operations $242,996 $(202,410) $122,193
_________ ________ ________
_________ ________ ________
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
3
<TABLE>
<CAPTION>
THE NEBRASKA TAX-EXEMPT TRUST
SERIES 2
STATEMENTS OF CHANGES IN NET ASSETS
<S> <C> <C> <C>
Period 12/9/93
Year Ended Year Ended (Date of Deposit)
1/31/96 1/31/95 through 1/31/94
__________ ____________ ________________
Operations:
Net investment income $ 102,132 $ 121,523 $ 66,260
Net realized loss on investments (11,705) (59,512)
Unrealized appreciation (depreciation)
on investments 152,569 (264,421) 55,933
_________ _________ _________
242,996 (202,410) 122,193
Distributions to Unitholders:
Net investment income (includes
accrued interest to carry on called
bonds: 1996- None; 1995-None; 1994-None) 102,581 158,434
Principal 131,980 915,498
_________ _________ _________
Total increase (decrease) in net assets 8,435 (1,276,342) 122,193
Net assets:
At the beginning of the period 1,839,426 3,115,768 2,993,575
_________ _________ _________
At the end of the period
(including distributable funds
applicable to Trust Units: 1996-
$23,445; 1995-$29,349; 1994-$66,260) $1,847,861 $1,839,426 $3,115,768
_________ _________ _________
_________ _________ _________
Trust Units outstanding at the end of the period 2,052 2,202 3,215
_________ _________ _________
_________ _________ _________
</TABLE>
[FN]
The accompanying notes are an integral part of these financial statements.
4
<TABLE>
THE NEBRASKA TAX-EXEMPT TRUST
SERIES 2
SCHEDULE OF INVESTMENTS
January 31, 1996
<CAPTION>
NAME OF ISSUER,
AGGREGATE COUPON RATE AND REDEMPTION MARKET
PRINCIPAL(4) MATURITY DATE RATING(1) PROVISIONS(2) VALUE(3)
_________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
$ 225,000 Hospital Authority No. 1 of Scotts Bluff County, A 2002 @ 102 $ 243,060
Nebraska Hospital Revenue Bonds, Series 1992 1998 @ 100 S.F.
(Regional West Medical Center Project) 6.45% Due
12/15/2004
300,000 City of Lincoln, Nebraska Water Revenue and Refunding AA+ 2003 @ 102 300,519
Bonds, Series 1993 5.30% Due 8/15/2011
110,000 Hall County School District 002 In the State of A1# 1998 @ 101.5 106,236
Nebraska (Grand Island, Nebraska School District)
General Obligation Bonds, Series 1993 5.15% Due 12/1/2014
400,000 City of Lincoln, Nebraska Electric System Revenue AA 2003 @ 102 388,503
Refunding Bonds, 1993 Series A 5.25% Due 9/1/2015 2012 @ 100 S.F.
115,000 Nebraska Higher Education Loan Program, Inc. Residual AAA 2004 @ 46.31 21,674
Asset Capital Appreciation Bonds, Series 1989 A (MBIA
Insured) 0.00% Due 12/15/2015(5)
400,000 Omaha Public Power District (Nebraska) Electric System AA 2003 @ 102 394,435
Revenue Bonds, 1993 Series C 5.50% Due 2/1/2017 2015 @ 100 S.F.
365,000 Nebraska Investment Finance Authority Multi-Family Aa# 2002 @ 103 369,989
Housing Revenue Bonds (FHA Insured Mortgage Loan - 2016 @ 100 S.F.
Muirfield Greens Apartment Project) Series 1992A
6.85% Due 12/1/2025
___________ __________
$1,915,000 $1,824,416
___________ __________
___________ __________
</TABLE>
[FN]
See accompanying notes to schedule of investments.
The accompanying notes are an integral part of these financial statements.
5
THE NEBRASKA TAX-EXEMPT TRUST
SERIES 2
NOTES TO SCHEDULE OF INVESTMENTS
1 All ratings are by Standard & Poor's Corporation as of January 31, 1996,
unless marked with a "#" in which the rating is by Moody's Investor's
Service, Inc.
2 There is shown under this heading the year in which each issue of
Bonds is initially redeemable and the redemption price for that year, or
if currently redeemable, the redemption price in 1996. Unless otherwise
indicated, each issue continues to be redeemable at declining prices
thereafter, but not below par value. "SF" indicates a sinking fund is
established with respect to an issue of Bonds. In addition, certain Bonds
in the trust portfolio may be redeemed in whole or in part other than by
operation of the stated redemption or sinking fund provisions under certain
unusual or extraordinary circumstances specified in the instruments setting
forth the terms and provisions of such bonds. Redemption pursuant to call
provisions generally will, and redemption pursuant to sinking fund provisions
may, occur at times when the redeemed Bonds have a valuation which represents
a premium over the call price or par.
To the extent that the Bonds were deposited in the Trust at a price higher
than the price at which they are redeemed, this will represent a loss of
capital when compared with the original Public Offering Price of the Units.
Conversely, to the extent that the Bonds were acquired at a price lower
than the redemption price, this will represent an increase in capital
when compared with the original Public Offering Price of the the Units.
Distributions of net income will generally be reduced by the amount of
the income which would otherwise have been paid with respect to redeemed
Bonds and, unless utilized to pay for Units tendered for redemption, there
will be distributed to Unitholders the principal amount and any premium
received on such redemption. The estimated current return in this event may
be affected by such redemptions.
3 See Note 1 to the accompanying financial statements for a description
of the method of determining cost and market value.
4 At January 31, 1996, the Portfolio of the Trust consists of 7 issues of
Bonds. One of the issues in the Trust are general obligation of the
governmental entity issuing them or are backed by the taxing power thereof,
representing 6% of principal amount to total Trust. All remaining issues
are payable directly or indirectly from the income of a specific project
or authority and are not supported by the issuer's power to levy taxes.
All the issuers of the Bonds in the Trust are located in the State of
Nebraska, divided by source of revenue (and percentage of principal
amount to total Trust) as follows: Utility, 3(57%); Education, 2(12%);
Housing, 1(19%); and Health Care, 1(12%).
5 This Bond has been purchased at a discount from the par value
because there is no stated interest income thereon. Such bonds are
normally described as "zero coupon" bonds. Over the life of such bonds
the value increases such that upon maturity the holders of such bonds
will receive 100% of the principal amount thereof. Approximately 6%
of the aggregate principal amount of the Bonds in the Trust are "zero
coupon" bonds.
(continued)
6
THE NEBRASKA TAX-EXEMPT TRUST
SERIES 2
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Entity - The Trust is one of a series of unit investment trusts created
under the laws of the State of Missouri pursuant to a Trust Indenture and
Agreement (the "Agreement") dated December 9, 1993, and is registered
under the Investment Company Act of 1940.
Valuation of Municipal Bonds - Municipal Bonds (Bonds) are stated at bid
prices as determined by Ranson & Associates, Inc. (the "Evaluator"). The
aggregate bid prices of the Bonds are determined by the Evaluator based on
(a) current bid prices of the Bonds, (b) current bid prices for comparable
bonds, (c) appraisal, or (d) any combination of the above.
Cost of Municipal Bonds - Cost of the Trust's Bonds was based on the
offering prices of the Bonds on December 9, 1993 (Date of Deposit). The
premium or discount (including any original issue discount) existing at
December 9, 1993, is not being amortized. Realized gain (loss) from Bond
transactions is reported on an identified cost basis.
2. UNREALIZED DEPRECIATION
An analysis of net unrealized depreciation at January 31, 1996, follows:
Gross unrealized depreciation $ (55,918)
________
________
3. EXPENSES OF THE TRUST
The Evaluator receives an annual fee of $.25 per $1,000 principal amount
of the underlying Bonds in the portfolio of the Trust based on the largest
aggregate amount of Bonds in the Trust at any time during such period. The
Trustee receives for ordinary services an annual fee from the Trust of
$1.21 per $1,000 of principal amount of bonds based on the largest
aggregate amount of Bonds in the Trust at any time during such period. The
Indenture provides for the Trust to be audited on an annual basis at the
expense of the Trust by independent public accountants selected by the
Sponsor. The audit fee paid by the Trust shall not exceed $.50 per Unit on
an annual basis.
4. FEDERAL INCOME TAXES
The Trust is not taxable for Federal income tax purposes. Each Unitholder
is considered to be the owner of a pro rata portion of the Trust and,
accordingly, no provision has been made for Federal income taxes.
7
THE NEBRASKA TAX-EXEMPT TRUST
SERIES 2
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
5. OTHER INFORMATION
Cost to investors - The cost to initial investors of Units of the Trust
was based on the aggregate offering price of the Bonds on the date of an
investor's purchase, plus a sales charge of 5.50% of the Public Offering
Price (equivalent to 5.820% of the net amount invested). The Public
Offering Price for secondary market transactions is based on the aggregate
bid price of the Bonds plus or minus a pro rata share of cash or overdraft
in the Principal Account, if any, on the date of an investor's purchase,
plus a sales charge of 5.50% of the Public Offering Price (equivalent to
5.82% of the net amount invested).
A reconciliation of the original cost of units to investors to the net
amount applicable to investors as of January 31, 1996, is set forth below:
Original cost to investors $2,993,575
Less:
Cost of securities sold or redeemed since
date of deposit (1,113,241)
Net unrealized depreciation of securities (55,918)
___________
Net amount applicable to investors $1,824,416
___________
___________
Distributions - Distributions of net interest income to Unitholders are
declared on the 15th of each month and paid on the 1st day of the
succeeding month. An initial distribution to investors of $3.97 per Unit
was paid on February 1, 1994.
Redemptions - Units tendered for redemption are redeemed at a price determined
on the basis of bid prices of the securities of the Trust. Transactions were
as follows:
<TABLE>
<S> <C> <C> <C>
1996 1995 1994
______ ______ ______
Units Amount Units Amount Units Amount
______ ______ _____ _______ _____ ______
Units redeemed 150 $128,477 1,013 $917,314 __ __
</TABLE>
Investment transactions - Proceeds from the sale or call of municipal bonds
were $126,525 and $915,498 for the years ended January 31, 1996 and 1995,
respectively. There were no proceeds received in the period December 9, 1993
(Date of Deposit) through January 31, 1994.
8
THE NEBRASKA TAX-EXEMPT TRUST
SERIES 2
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
5. OTHER INFORMATION (continued)
<TABLE>
<CAPTION>
Selected data for a Unit of the Trust outstanding for each period -
<S> <C> <C> <C>
Period 12/9/93
Year Ended Year Ended (Date of Deposit)
1/31/96 1/31/95 through 1/31/94
__________ ___________ ________________
Investment income - interest $ 51.63 $ 57.65 $ 20.85
Expenses 1.86 2.47 .24
________ ________ ________
Investment income - net 49.77 55.18 20.61
Distributions to Unitholders:
Investment income - net (49.99) (71.95)
Principal (64.32) (.06)
Net gain (loss) on investments 129.71 (116.97) 17.40
________ ________ ________
Increase (decrease) in net asset value 65.17 (133.80) 38.01
Net asset value:
Beginning of each period 835.34 969.14 931.13
________ ________ ________
End of each period, including
distributable funds $900.51 $835.34 $969.14
________ ________ ________
________ ________ ________
</TABLE>
9
CONSENT OF ALLEN, GIBBS & HOULIK, L.C., INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Legal and Auditing
Matters" and to the use of our report dated April 26, 1996 in this Post-
Effective Amendment No. 3 to the Registration Statement (Form S-6 No. 33-
72026) and related Prospectus of The Nebraska Tax-Exempt Trust, Series 2.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
April 26, 1996
THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.
BOTH PARTS OF THIS PROSPECTUS SHOULD BE
RETAINED FOR FUTURE REFERENCE.
PROSPECTUS PART TWO
THE RANSON MUNICIPAL TRUST, MULTI-STATE SERIES
The Trust. The Trust consists of underlying separate unit investment
trusts (the "Trust"). The portfolio of each Trust is comprised of interest
bearing obligations issued by or on behalf of municipalities or other
governmental authorities in the state for which the Trust is named (the
"Bonds" or "Securities"). In the opinion of counsel, interest income to the
Trusts and to Certificateholders thereof, with certain exceptions, is exempt
under existing law from Federal income taxes, from state income taxes to the
extent indicated when held by residents of the state where the issuers of the
Bonds in such Trusts are located, and, in the case of each Kansas Trust, from
local Kansas intangible personal property taxes, but may be subject to the
Federal alternative minimum tax and other state and local taxes. Capital
gains, if any, are subject to tax. None of the Nebraska Trusts will hold more
than 20% of their net assets in Securities which are subject to the Federal
alternative minimum tax. The objectives of the Trusts include (1) interest
income which is exempt from Federal income taxes, from state income taxes to
the
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is that date as set forth in Part One
of this Prospectus.
RANSON & ASSOCIATES, INC.
SPONSOR
extent indicated when held by residents of the state where the issuers of the
Bonds in such Trusts are located, and, in the case of each Kansas Trust, from
intangible personal property taxes levied by Kansas counties, cities and
townships, (2) conservation of capital, and (3) liquidity of investment (see
"Objectives of the Trusts"). For a listing of the Bonds, if any, subject to
the Federal alternative minimum tax see Part One of this Prospectus. The
payment of interest and the preservation of capital are dependent upon the
continuing ability of the issuers and/or obligors of the Bonds to meet their
respective obligations. Certain of the Bonds are obligations which derive
their payment from mortgage loans. A substantial portion of such Bonds will
probably be redeemed prior to their scheduled maturities; any such early
redemption will reduce the aggregate principal amount of the affected Trust
and may also affect the Estimated Long-Term Return and the Estimated Current
Return. Depending on which Bonds are redeemed at any given time, the then
Estimated Current Return may be higher, lower or unchanged from the Estimated
Current Return that existed immediately prior to such redemption. There is no
assurance that the Trusts' objectives will be met. The Sponsor of the Trusts
is Ranson & Associates, Inc., Suite 450, 120 South Market Street, Wichita,
Kansas 67202.
Public Offering Price. The secondary market Public Offering Price will
be equal to the aggregate bid price of the Bonds in the portfolio of a Trust
divided by the number of Units outstanding, plus a sales charge as set forth
in Part One of this Prospectus under "Summary of Essential Financial
Information." If the Bonds in the Trusts were available for direct purchase
by investors, the purchase prices of the Bonds would not include the sales
charge included in the Public Offering Price of the Units. See "Public
Offering Information." In addition, the Public Offering Price will have added
to it the proportionate share of accrued and undistributed interest to the
date of settlement (five business days after order). See "Accrued Interest to
Carry." The value of the Bonds will fluctuate with market and credit
conditions, including any changes in interest rate levels.
The Units. Each Unit represents a fractional undivided interest in the
principal and net income of a Trust. The minimum purchase is one Unit.
Distributions. Distributions of interest received by a Trust will be
made on a monthly basis (prorated on an annual basis) on the first day of each
month to holders of record on the fifteenth day of the preceding month.
Distributions of funds in the Principal Account, if any, will also be made
monthly on the first day of each month to holders of record on the fifteenth
day of the preceding month. See "Distribution of Interest and Principal."
Estimated Current Return and Estimated Long-Term Return. The Estimated
Current Return is calculated by dividing the estimated net annual interest
income per Unit by the Public Offering Price. The estimated net annual
interest income per Unit will vary with any changes in fees and expenses of
the Trustee and the Evaluator and with the principal prepayment, redemption,
maturity, exchange or sale of the Bonds. The Public Offering Price will vary
with any changes in the bid prices of the underlying Bonds. There is,
therefore, no assurance that the Estimated Current Return will be realized in
the future. The Estimated Long-Term Return is calculated using a formula
which (1) takes into consideration, and determines and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Bonds in a Trust and (2) takes into account the
expenses and sales charge associated with each Trust Unit. Since the market
values and estimated retirements of the Bonds and the expenses of a Trust will
change, there is no assurance that the present Estimated Long-Term Return will
be realized in the future. The Estimated Current Return and Estimated Long-
Term Return are expected to differ because the calculation of the Estimated
Long-Term Return reflects the estimated date and amount of principal returned
while the Estimated Current Return calculation includes only net annual
interest income and Public Offering Price.
Redemption and Market For Units. A Certificateholder may redeem Units
at the office of the Trustee, Investors Fiduciary Trust Company (see "Trustee
Information"), at prices based upon the bid prices of the Bonds. In addition,
although not obligated to do so, the Sponsor intends to maintain a secondary
market for the Units at prices based upon the aggregate bid price of the Bonds
in the portfolio of the Trusts (see "Redemption and Repurchase of Units").
Summary of the Trusts
Each series of the Trust is one of a series of unit investment trusts
created under the laws of the State of Missouri pursuant to a Trust Indenture
and Agreement (the "Indenture") between Ranson & Associates, Inc., as
Sponsor, and Investors Fiduciary Trust Company, as Trustee.
Each Trust consists of a portfolio of interest bearing obligations
issued by or on behalf of the state for which such Trust is named and
political subdivisions, municipalities and authorities thereof, the interest
on which is excludable, in the opinion of recognized bond counsel, from
Federal gross income, from state income taxes to the extent indicated when
held by residents of the state where the issuers of the Bonds in such Trust
are located, and in the case of a Kansas Trust from local Kansas intangible
personal property taxes. However, interest on all obligations held by a Trust
may be subject to the alternative minimum tax for Federal income tax purposes.
Accordingly, the Trusts may be appropriate only for investors who are not
subject to the alternative minimum tax. See "Tax Status (Federal, State,
Capital Gains)." An investment in a Trust should be made with an
understanding of the risks associated with an investment in such obligations.
Fluctuations in interest rates may cause corresponding fluctuations in the
value of the Bonds in a portfolio. The Sponsor cannot predict whether the
value of the Bonds in a portfolio will increase or decrease.
Each Unit offered represents that fractional undivided interest in a
Trust indicated under "Summary of Essential Financial Information" in Part One
of this Prospectus. To the extent that any Units are redeemed by the Trustee,
the fractional undivided interest in a Trust represented by each unredeemed
Unit will increase, although the actual interest in a Trust represented by
such fraction will remain unchanged. Units in a Trust will remain outstanding
until redeemed upon tender to the Trustee by Certificateholders, which may
include the Sponsor, or until the termination of the Indenture.
The Indenture may be amended at any time by consent of
Certificateholders representing at least 51% of the Units of a Trust then
outstanding. The Indenture may also be amended by the Trustee and the Sponsor
without the consent of any of the Certificateholders (1) to cure any ambiguity
or to correct or supplement any provision thereof which may be defective or
inconsistent, or (2) to make such other provisions as shall not adversely
affect the interest of the Certificateholders, provided, however, that the
Indenture may not be amended to increase the number of Units issuable
thereunder or to permit the deposit or acquisition of bonds either in addition
to, or in substitution for any of the Bonds initially deposited in a Trust
except in connection with the substitution of refunding bonds under certain
circumstances. The Trustee shall advise the Certificateholders of any
amendment promptly after the execution thereof.
The Trust may be terminated at any time by consent of
Certificateholders representing at least 51% of the Units of a Trust then
outstanding or by the Trustee when the value of a Trust, as shown by any semi-
annual evaluation, is less than 20% of the original principal amount of the
Trust. The Indenture will terminate upon the redemption, sale or other
disposition of the last Bond held in a Trust, but in no event shall it
continue beyond the end of the calendar year preceding the fiftieth
anniversary of its execution.
Written notice of any termination specifying the time or times at which
Certificateholders may surrender their certificates for cancellation shall be
given by the Trustee to each Certificateholder at the address appearing on the
registration books of a Trust maintained by the Trustee. The Trustee will
begin to liquidate any Bonds held in a Trust within a reasonable period of
time from said notification and shall deduct from the proceeds any accrued
costs, expenses or indemnities provided by the Indenture, including any
compensation due the Trustee, any costs of liquidation and any amounts
required for payment of any applicable taxes, governmental charges or final
operating costs of a Trust.
The Trustee shall then distribute to Certificateholders their pro rata
shares of the remaining balances in the Principal and Interest Accounts
together with a final distribution statement which will be in substantially
the same form as the annual distribution statement (see "Other Rights of
Certificateholders"). Any amount held by the Trustee in any reserve account
will be distributed when the Trustee determines the reserve is no longer
necessary in the same manner as the final distribution from the Principal and
Interest Accounts (see "Distribution of Interest and Principal").
The Sponsor and the Trustee shall be under no liability to
Certificateholders for taking any action or for refraining from any action in
good faith pursuant to the Indenture, or for errors in judgment, but shall be
liable only for their own negligence, lack of good faith or willful
misconduct. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Bonds. In the event of the
failure of the Sponsor to act under the Indenture, the Trustee may act
thereunder and shall not be liable for any action taken by it in good faith
under the Indenture.
The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Bonds or upon the interest thereon
or upon it as Trustee under the Indenture or upon or in respect of a Trust
which the Trustee may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction.
Certain of the Bonds in a Trust may be "zero coupon" bonds. Zero
coupon bonds are purchased at a deep discount because the buyer receives only
the right to receive a final payment at the maturity of the bond and does not
receive any periodic interest payments. The effect of owning deep discount
bonds which do not make current interest payments (such as the zero coupon
bonds) is that a fixed yield is earned not only on the original investment but
also, in effect, on all discount earned during the life of such 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. See "Notes to
Trust Portfolio" in Part One of this Prospectus.
Description of Trust Portfolios
Portfolios. Since a Kansas Trust invests substantially all of its
assets in Kansas municipal securities, a Kansas Trust is susceptible to
political and economic factors affecting issuers of Kansas municipal
securities. According to the 1990 census, 2,477,574 people lived in Kansas,
representing a 4.8% increase over the 1980 census. Based on these numbers,
Kansas ranked thirty-second in the nation in population size. During Fiscal
Year 1993 (July 1, 1992 to June 30, 1993), the population of Kansas reached
2,523,000 with a growth rate projected at 1.1%.
Based on statistics provided by the Kansas Department of Commerce &
Housing, real personal income in Kansas grew at a rate of 3.9% in 1992, and
for calendar year 1993 the projected rate is 4.3%. Both rates are slowed by
the loss of high-paying manufacturing jobs. Kansas ranks 20th in the United
States in average per capital income of $20,300.
In Fiscal Year 1993, non-farm wage and salary employment in Kansas
showed an increase of 37,100 jobs (3.3%) with a total of 1,142,500 persons
employed. Despite heavy layoffs in the transportation sector (a 10.6% loss)
total manufacturing employment decreased only 1%. Layoffs by major employers
in the wholesale and retail sectors were offset by general growth with an
additional 6,800 jobs added during Fiscal Year 1993, a 2.4% increase. The
service sector added 5,400 jobs during this period. The unemployment rates
for calendar years 1992 and 1993 were 4.2% and 5.0%, respectively. Although
not strictly comparable, the preliminary seasonally adjusted rate for July
1994 was 5.2%.
Kansas continues to be among the nation's top agricultural states,
ranking first in wheat and sorghum production. The total value of crops
produced in Kansas in Fiscal Year 1993 was $86.5 billion, with Kansas ranking
seventh in cash receipts from farm marketing. Kansas also ranks fifth in the
nation in livestock production, accounting for $4.7 billion in farm income.
Total Kansas exports of manufactured goods increased 18% to $2.38
billion during the 1992 calendar year while agricultural exports showed an
increase of 25% to $2.48 billion. These two export figures show the real
diversity of the Kansas economy. Leading the way in exports for manufactured
good is transportation equipment with $767 million. Agricultural exports
continue to be led by wheat/flour as that group's leading export commodity.
In Fiscal Year 1993, revenues rose in Kansas to $2.9 billion, a 19%
increase over 1992 revenues. This increase was attributable to both larger
income and sales taxes, as the economy continued to expand and a higher sales
tax rate became effective. An 8% increase in Fiscal Year 1993 expenditures
permitted Kansas to realize an operating surplus of $242 million. The state
budgeted a 1994 revenue increase equal to 3.5% and an expenditure increase
equal to 17.1%. The increase in expenditures is attributable to a $244
million, or 21%, expansion of local school aid funding. Prior to the 1993
surplus, Kansas incurred three consecutive operating deficits which aggregated
$318 million. The State plans 1994 and 1995 operating deficits equal to $115
and $32 million, respectively. These deficits have been planned in order to
comply with statutory requirements which limit General Fund ending balances to
7.5% of expenditures for 1995 and each year thereafter. The General Fund 1993
ending balance was an ample 14.3% of expenditures.
Kansas is prohibited from incurring general obligation debt. It has
incurred a minimal amount of annual appropriation debt and net tax-supported
debt in the approximate amount of $835 million. Debt per capita in Kansas in
Fiscal Year 1993 amounted to $235, and annual debt service as a percentage of
expenditures was approximately 1.4%. Kansas is not expected, over the
intermediate term, to issue significant amounts of tax-supported debt.
However, it is expected to issue before 1998 approximately $515 million of
revenue bonds, the proceeds of which will be used for highway improvements.
Expenditures totaling $6.7 billion from all funding sources were
approved for Fiscal Year 1994. Approximately 59.2% of the total budget is for
aid to local units of government (32.9%) or for direct assistance payments to
or on behalf of individuals (26.3%). Aid to local school districts, community
colleges and area vocations-technical schools accounts for 82.1% of the aid
expenditures. The aid recommendation also includes $127.7 million for local
road and bridge programs.
The State General Fund for Fiscal Year 1994 accounts for 46.8% of the
State's financing, Special Revenue Funds accounts for 32.3%, Trust and Agency
Funds 9.9%, and the Highway Fund 8.8%. The State General Fund is obtained
from individual income taxes (38.1%), sales and use taxes (39.4%), corporate
income tax (6.4%) and other income and excise taxes and other revenue (16.1%).
Since a Nebraska Trust invests substantially all of its assets in
Nebraska municipal securities, a Nebraska Trust is susceptible to political
and economic factors affecting the issuers of Nebraska municipal securities.
Unemployment. The Nebraska unemployment rate has been among the lowest
in the nation in recent years. In July 1994, the Nebraska unemployment rate
was 2.6 percent; the national average was 6.1 percent. The annual average
Nebraska unemployment rates during the last several years have been 3.1
percent in 1989, 2.2 percent in 1990, 2.8 percent in 1991, 3.0 percent in
1992, and 2.6 percent in 1993, compared to 5.3 percent, 5.5 percent, 6.7
percent, 7.4 percent and 6.8 percent overall in the United States.
Job Growth. Growth in non-farm payroll employment in Nebraska has
generally been positive in recent months and years. From April 1993 to April
1994, non-farm payroll jobs increased by an estimated 8,000 in Nebraska, or by
1.0 percent.
In 1990, the average number of non-farm jobs in Nebraska payrolls was
730,100. That number increased 1.2 percent to 739,200 in 1991; 1.5 percent to
750,000 in 1992; and 1.7 percent to 762,700 in 1993. Over the same period,
U.S. non-agricultural employment decreased 1.1 percent in 1991; increased 0.3
percent in 1992; and increased 1.8 percent in 1993.
Manufacturing Job Growth. Manufacturing jobs have grown in Nebraska in
recent years, while generally declining nationally. Nebraska manufacturing
jobs totaled an estimated 104,200 in April 1994, or 2.2 percent more than a
year earlier.
The number of manufacturing jobs in Nebraska averaged 97,800 in 1990;
increased to 99,600 in 1991 (1.8 percent); increased to 100,700 in 1992 (1.1
percent); and increased to 102,900 in 1993 (2.2 percent). Overall in the
United States, the number of manufacturing jobs declined 3.5 percent in 1991;
fell 1.6 percent in 1992; and decreased 0.6 percent in 1993.
Income. Nebraska's per capita income has historically been below the
average of the United States, although the gap has closed in recent years.
Per capita personal income in the State grew from $17,379 in 1990 to $18,059
in 1991, a 3.9 percent increase; to $18,957 in 1992, a 5.1 percent increase
and to $19,726 in 1993, a 4.0 percent increase. From 1992 to 1993, national
per capita income grew from $20,105 to $20,817, a 3.5 percent increase. In
1988, Nebraska ranked twenty-eighth among the states in per capita income; by
1993, the State ranked twenty-third. Personal income growth in Nebraska
increased 4.4 percent in 1993, or from $30,368,000,000 in 1992 to
$31,703,000,000 in 1993. That was only slightly below the national growth
rate of 4.7 percent.
Cost of Living. The cost of living in Nebraska is generally below the
national average. Where the national average is 100.0, the four Nebraska
communities surveyed averaged a composite 90.1 rating in the first quarter of
1994. In individual cost of living sectors, Nebraska scored well below the
national average in the indices for housing, health care, utilities, and
miscellaneous goods and services. Three of the four Nebraska communities in
the survey, including Omaha and Lincoln, were above the national average in
transportation costs; the State's two non-metropolitan cities in the survey,
Scottsbluff and Hastings, were close to the national average for grocery
items.
Population. With Nebraska's economic gains in recent years have come
population increases through positive net migration. Reversing a long period
of net out-migration form 1974 to 1990, an estimated 2,300 more people moved
to Nebraska than left from 1990 to 1991. Net in-migration ceased in 1992 but
a natural increase (births exceeding deaths) helped boost the State's total
population from the 1,578,385 recorded in the 1990 Census to an estimated
1,607,000 in 1993.
Economic Future. Although the Nebraska economy avoided the national
recession of the early 1990s, it is expected to grow at a slightly slower rate
during the next two years even though the national economy is expanding. The
Bureau of Business Research of the University of Nebraska-Lincoln (the
"Bureau") estimates that annual average non-farm employment in the State will
grow 1.4 percent in 1994 and 1.3 percent in 1995, or at about the same rate as
in 1993. Personal income is expected to grow at a slightly higher rate than
in 1993, or 5.6 percent in 1994 and 5.1 percent in 1995. Consequently,
taxable retail sales are expected to grow 5.1 percent in 1994 and 4.4 percent
in 1995. Over the long term, after 1995, the Bureau forecasts "employment
gains will range between 1 to 1.5 percent per year. Personal income grow will
range between 1 and 2 percent per year ahead of the inflation rate . . . Net
taxable sales growth will . . . [range] between 0 and 1 percent per year."
The foregoing information constitutes only a brief summary of some of
the financial difficulties which may impact certain issuers of Bonds and does
not purport to be a complete or exhaustive description of all adverse
conditions to which the issuers in the Kansas and Nebraska Trusts are subject.
Additionally, many factors including national economic, social and
environmental policies and conditions, which are not within the control of the
issuers of Bonds, could affect or could have an adverse impact on the
financial condition of the respective State and various agencies and political
subdivisions located in the respective State. The Sponsor is unable to
predict whether or to what extent such factors or other factors may affect the
issuers of Bonds, the market value or marketability of the Bonds or the
ability of the respective issuers of the Bonds acquired by the Kansas or
Nebraska Trusts to pay interest on or principal of the bonds.
Certain of the Bonds in a Trust may be obligations which derive their
payment from mortgage loans. Included among these Bonds may be single family
mortgage revenue bonds issued for the purpose of acquiring from originating
financial institutions notes secured by mortgages on residences located within
the issuer's boundaries and owned by persons of low or moderate income. In
view of this an investment in a Trust should be made with an understanding of
the characteristics of such issuers and the risks which such an investment may
entail. Mortgage loans are generally partially or completely prepaid prior to
their final maturities as a result of events such as sale of the mortgaged
premises, default, condemnation or casualty loss. Because these bonds are
subject to extraordinary mandatory redemption in whole or in part from such
prepayments on mortgage loans, a substantial portion of such bonds will
probably be redeemed prior to their scheduled maturities or even prior to
their ordinary call dates. Extraordinary mandatory redemption without premium
could also result from the failure of the originating financial institutions
to make mortgage loans in sufficient amounts within a specified time period.
Additionally, unusually high rates of default on the underlying mortgage loans
may reduce revenues available for the payment of principal of or interest on
such mortgage revenue bonds. These bonds were issued under Section 103A of
the Internal Revenue Code, which Section contains certain requirements
relating to the use of the proceeds of such bonds in order for the interest on
such bonds to retain its tax-exempt status. In each case the issuer of the
bonds has covenanted to comply with applicable requirements and bond counsel
to such issuer has issued an opinion that the interest on the bonds is exempt
from Federal income tax under existing laws and regulations. Certain of the
Bonds in a Trust may be obligations of issuers whose revenues are primarily
derived from mortgage loans to housing projects for low to moderate income
families. The ability of such issuers to make debt service payments will be
affected by events and conditions affecting financed projects, including,
among other things, the achievement and maintenance of sufficient occupancy
levels and adequate rental income, increases in taxes, employment and income
conditions prevailing in local labor markets, utility costs and other
operating expenses, the managerial ability of project managers, changes in
laws and governmental regulations, the appropriation of subsidies and social
and economic trends affecting the localities in which the projects are
located. The occupancy of housing projects may be adversely affected by high
rent levels and income limitations imposed under Federal and state programs.
Certain issuers of housing bonds have considered various ways to redeem bonds
they have issued prior to the stated first redemption dates for such bonds.
In one situation an issuer, in reliance on its interpretation of certain
language in the indenture under which one of its bond issues was created,
redeemed all of such issue at par in spite of the fact that such indenture
provided that the first optional redemption was to include a premium over par
and could not occur prior to a later date. In connection with the housing
bonds held by a Trust, the Sponsor at the date of this Prospectus is not aware
that any of the respective issuers of such Bonds are actively considering the
redemption of such Bonds prior to their respective stated initial call dates.
For a general discussion of the effects of Bond prepayments and redemptions on
Certificateholders who acquired Units at a time when such Bonds were valued in
excess of the principal amount or redemption price of such Bonds, see "Bond
Redemptions" below.
Certain of the Bonds in a Trust may be health care revenue bonds. In
view of this, an investment in a Trust should be made with an understanding of
the characteristics of such issuers and the risks which such an investment may
entail. Ratings of bonds issued for health care facilities are often based on
feasibility studies that contain projections of occupancy levels, revenues and
expenses. A facility's gross receipts and net income available for debt
service will be affected by future events and conditions including, among
other things, demand for services and the ability of the facility to provide
the services required, physicians' confidence in the facility, management
capabilities, economic developments in the service area, competition, efforts
by insurers and governmental agencies to limit rates, legislation establishing
state rate-setting agencies, expenses, the cost and possible unavailability of
malpractice insurance, the funding of Medicare, Medicaid and other similar
third party payor programs, and government regulation. Federal legislation
requires a system of prospective Medicare reimbursement which may restrict the
flow of revenues to hospitals and other facilities which are reimbursed for
services provided under the Medicare program. Future legislation or changes
in the areas noted above, among other things, would affect all hospitals to
varying degrees and, accordingly, any adverse changes in these areas may
adversely affect the ability of such issuers to make payment of principal and
interest on Bonds held in the portfolio of a Trust. Such adverse changes also
may adversely affect the ratings of the Bonds held in the portfolio of the
Trust.
Certain of the Bonds in a Trust may be obligations whose revenues are
primarily derived from the sale of electric energy. Utilities are generally
subject to extensive regulation by state utility commissions which, among
other things, establish the rates which may be charged and the appropriate
rate of return on an approved asset base. The problems faced by such issuers
include the difficulty in obtaining approval for timely and adequate rate
increases from the governing public utility commission, the difficulty in
financing large construction programs, the limitations on operations and
increased costs and delays attributable to environmental considerations,
increased competition, recent reductions in estimates of future demand for
electricity in certain areas of the country, the difficulty of the capital
market in absorbing utility debt, the difficulty in obtaining fuel at
reasonable prices and the effect of energy conservation. All of such issuers
have been experiencing certain of these problems in varying degrees. In
addition, Federal, state and municipal governmental authorities may from time
to item review existing and impose additional regulations governing the
licensing, construction and operation of nuclear power plants, which may
adversely affect the ability of the issuers of such Bonds to make payments of
principal and/or interest on such Bonds.
Certain of the Bonds in a Trust may be transportation revenue bonds.
Payment on such bonds is dependent on revenues from projects such as tolls on
turnpikes. Therefore, payment may be adversely affected by a reduction in
revenues due to such factors as competition from toll-free vehicular bridges
and roads, increased cost of maintenance, lower cost of alternative modes of
transportation and a reduction in the availability of fuel to motorists or
significant increases in the costs thereof.
Certain of the Bonds in a Trust may be obligations which derive their
payment primarily or solely by revenues from the ownership and operation of
particular facilities, such as correctional facilities, parking facilities,
convention centers, arenas, museums and other facilities owned or used by a
charitable entity. Payment on bonds related to such facilities is, therefore,
primarily or solely dependent on revenues from such projects, including user
fees charges and rents. Such revenues may be affected adversely by increased
construction and maintenance costs or taxes, decreased use, competition from
alternative facilities, reduction or loss of rents or the impact of
environmental considerations.
Certain of the Bonds in a Trust may consist of obligations of issuers
which are, or which govern the operation of colleges and universities and
whose revenues are derived mainly from tuition, dormitory revenues, grants and
endowments. General problems relating to college and university obligations
would include the prospect of a declining percentage of the population
consisting of "college" age individuals, possible inability to raise tuitions
and fees sufficiently to cover increased operating costs, the uncertainty of
continued receipt of Federal grants and state funding and new government
legislation or regulations which may adversely affect the revenues or costs of
such issuers. All of such issuers have been experiencing certain of these
problems in varying degrees.
Bond Redemptions. Because certain of the Bonds in a Trust may from
time to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Certificateholders and will not be reinvested, no assurance can
be given that a Trust will retain for any length of time its present size and
composition. Neither the Sponsor nor the Trustee shall be liable in any way
for any default, failure or defect in any Bond. The Trustee has no power to
vary the investments of the Trust, i.e., the Trustee has no managerial power
to take advantage of market variations to improve a Certificateholder's
investment.
Certain of the Bonds in the Trusts are subject to redemption prior to
their stated maturity date pursuant to sinking fund provisions, call
provisions or extraordinary optional or mandatory redemption provisions. A
sinking fund is a reserve fund accumulated over a period of time for
retirement of debt. A callable debt obligation is one which is subject to
redemption or refunding prior to maturity at the option of issuer. A
refunding is a method by which a debt obligation is redeemed, at or before
maturity, by the proceeds of a new debt obligation. In general, call
provisions are more likely to be exercised when the offering side valuation is
at a premium over par than when it is at a discount from par. The portfolio
in Part One of this Prospectus contains a listing of the sinking fund and call
provisions, if any, with respect to each of the debt obligations.
Extraordinary optional redemptions and mandatory redemptions result from the
happening of certain events. Generally, events that may permit the
extraordinary optional redemption of Bonds or may require the mandatory
redemption of Bonds include, among others: a final determination that the
interest on the Bonds is taxable; the substantial damage or destruction by
fire or other casualty of the project for which the proceeds of the Bonds were
used; an exercise by a local, state or Federal governmental unit of its power
of eminent domain to take all or substantially all of the project for which
the proceeds of the Bonds were used; changes in the economic availability of
raw materials, operating supplies or facilities or technological or other
changes which render the operation of the project for which the proceeds of
the Bonds were used uneconomic; changes in law or an administrative or
judicial decree which renders the performance of the agreement under which the
proceeds of the Bonds were made available to finance the project impossible or
which creates unreasonable burdens or which imposes excessive liabilities,
such as taxes, not imposed on the date the Bonds are issued on the issuer of
the Bonds or the user of the proceeds of the Bonds; an administrative or
judicial decree requires the cessation of a substantial part of the operations
of the project financed with the proceeds of the Bonds; an overestimate of the
costs of the project to be financed with the proceeds of the Bonds resulting
in excess proceeds of the Bonds which may be applied to redeem Bonds; or an
underestimate of a source of funds securing the Bonds resulting in excess
funds which may be applied to redeem Bonds. See "Trust Portfolio" and "Notes
to Trust Portfolio" in Part One. See also "Portfolio" above for possible
redemptions prior to initial stated call dates. Certain of the Bonds in a
Trust may have been purchased by the Trust at premiums over the par value
(principal amount) of such Bonds (see "Trust Portfolio" in Part One). To the
extent Certificateholders acquire their Units at a time Bonds are valued at a
premium over such par value and such Bonds are subsequently redeemed or
prepaid at par or for less than such valuations, Certificateholders will
likely sustain losses in connection with such redemptions or prepayments. For
the tax effects of Bond redemptions generally, see "Tax Status (Federal,
State, Capital Gains)."
General. To the best knowledge of the Sponsor there is no litigation
pending as of the date of this Prospectus in respect of any Bonds which might
reasonably be expected to have a material adverse effect upon a Trust. At any
time during the life of the Trust, litigation may be initiated on a variety of
grounds with respect to Bonds in a Trust. Such litigation as, for example,
suits challenging the issuance of pollution control revenue bonds under
environmental protection statutes, may affect the validity of such Bonds or
the tax-free nature of the interest thereon. While the outcome of litigation
of such nature can never be entirely predicted, the Trusts have received
opinions of bond counsel to the issuing authorities of each Bond on the date
of issuance to the effect that such Bonds have been validly issued and that
the interest thereon is exempt from Federal income tax. In addition, other
factors may arise from time to time which potentially may impair the ability
of issuers to meet the obligations undertaken with respect to the Bonds.
Objectives of the Trusts
The Trusts have been formed to provide Certificateholders interest
income which is exempt from Federal income taxes, from state income taxes when
held by residents of the state where the issuers of the Bonds in such Trust
are located, and, in the case of a Kansas Trust from local Kansas intangible
personal property taxes. In addition, the Trusts also have objectives which
include conservation of capital and liquidity of investment. There is no
assurance that the Trusts' objectives will be met.
In selecting Bonds for a Trust, the following factors, among others,
were considered by the Sponsor: (a) either the Standard & Poor's Corporation
rating of the Bonds was in no case less than "BBB-" or the Moody's Investors
Service, Inc. rating of the Bonds was in no case less than "Baa3" including
provisional or conditional ratings, respectively, or, if not rated, the Bonds
had, in the opinion of the Sponsor, credit characteristics sufficiently
similar to the credit characteristics of interest-bearing tax-exempt
obligations that were so rated as to be acceptable for acquisition by a Trust
(see "Description of Bond Ratings") and (b) the prices of the Bonds relative
to other bonds of comparable quality and maturity. Medium-quality Bonds
(rated BBB or A by S&P or Baa or A by Moody's) are obligations of issuers that
are considered to possess adequate, but not outstanding, capacities to service
the obligations. Investment in medium-quality debt securities involves
greater investment risk, including the possibility of issuer default or
bankruptcy, than investment in higher-quality debt securities. An economic
downturn could severely disrupt this market and adversely affect the value of
outstanding bonds and the ability of the issuers to repay principal and
interest. During a period of adverse economic changes, including a period of
rising interest rates, issuers of such bonds may experience difficulty in
servicing their principal and interest payment obligations. Medium-quality
debt securities tend to be less marketable than higher-quality debt securities
because the market for them is less broad. During periods of thin trading in
these markets, the spread between bid and asked prices is likely to increase
significantly, and a Trust may have greater difficulty selling the medium-
quality debt securities in its portfolio. After the creation of a Trust, a
Bond may cease to be rated or its rating may be reduced below such minimum
standards. Neither event requires elimination of such Bond from a portfolio
but may be considered in the Sponsor's determination as to whether or not to
direct the Trustee to dispose of the Bond (see "Trustee Information").
The Trust consists of a portfolio of fixed rate, long term debt
obligations. An investment in a Trust should be made with an understanding of
the risks associated with an investment in such obligations. Fluctuations in
interest rates may cause corresponding fluctuations in the value of the Bonds
in a portfolio. The Sponsor cannot predict whether the value of the Bonds in
a portfolio will increase or decrease.
Estimated Current Return and Estimated Long-Term Return
The Estimated Current Return is calculated by dividing the estimated
net annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in fees
and expenses of the Trustee 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; 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 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 the Estimated Current Return
calculation includes only net annual interest income and Public Offering
Price.
Public Offering Information
Units in a Trust are offered at the Public Offering Price which is
based on the bid prices of the Bonds in the portfolio plus a sales charge set
forth in Part One of this Prospectus under "Summary of Essential Financial
Information" plus accrued and undistributed interest to the settlement date.
Units repurchased in the secondary market may be offered by this Prospectus at
the Public Offering Price in the manner described herein.
Although payment is normally made five business days following the
order for purchase, payment 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.
Units offered by this Prospectus will be distributed to the public by
the Sponsor and certain dealers. Dealers will be allowed a concession equal
to 3.5% of the Public Offering Price; however, resales of Units by such
dealers to the public will be made at the Public Offering Price. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase
of Units and to change the amount of the concession to dealers from time to
time. The minimum purchase will be one Unit.
Certain commercial banks are making Units of the Trusts available to
their customers on an agency basis. A portion of the sales charge paid by
their customers is retained by or remitted to the banks in an amount allowing
a concession equal to that shown above for dealers. Under the Glass-Steagall
Act, banks are prohibited from underwriting Trust Units; however, the Glass-
Steagall Act does permit certain agency transactions and the banking
regulators have indicated that these particular agency transactions are
permitted under such Act.
Accrued Interest to Carry
Accrued interest to carry consists of two elements. The first element
arises as a result of accrued interest which is the accumulation of unpaid
interest on a bond from the last day on which interest thereon was paid.
Interest on Bonds in a Trust is paid to the Trustee either monthly or semi-
annually. However, interest on the Bonds in a Trust is accounted for daily on
an accrual basis. Because of this, a Trust always has an amount of interest
earned but not yet collected by the Trustee because of coupons that are not
yet due. For this reason, the Public Offering Price of Units will have added
to it the proportionate share of accrued and undistributed interest to the
date of settlement.
The second element of accrued interest to carry arises because of the
structure of the Interest Account. The Trustee has no cash for distribution
to Certificateholders until it receives interest payments on the Bonds in a
Trust. The Trustee is obligated to advance its own funds, at times, in order
to make interest distributions. The Trustee will recover such advances
without interest or other costs to a Trust from interest payments made on the
Bonds. Interest Account balances are established so that it will not be
necessary on a regular basis for the Trustee to advance its own funds in
connection with such interest distributions. The Interest Account balances
are also structured so that there will generally be positive cash balances and
since the funds held by the Trustee will be used by it to earn interest
thereon, it benefits thereby (see "Expenses of the Trust").
If a Certificateholder sells or redeems all or a portion of his Units
or if the Bonds in a Trust are sold or otherwise removed or if the Trust is
liquidated, he or she will receive at that time his or her proportionate share
of the accrued interest to carry computed to the settlement date in the case
of sale or liquidation and to the date of tender in the case of redemption.
Redemption and Repurchase of Units
Certificateholders may redeem all or a portion of their Units by tender
to the Trustee, at its corporate office in Kansas City, Missouri (see "Trustee
Information"), of the certificates representing Units to be redeemed, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed. In order to effect a redemption of Units, Certificateholders must
tender their certificates to the Trustee or provide satisfactory indemnity
required in connection with lost, stolen or destroyed certificates. No
redemption fee will be charged. On the seventh calendar day following such
tender, or if the seventh calendar day is not a business day, on the first
business day prior thereto, the Certificateholder will be entitled to receive
in cash for each Unit tendered an amount equal to the redemption price per
Unit as next computed after receipt by the Trustee of such tender of Units as
determined by the bid price of the Bonds in a Trust on the date of tender (the
"Redemption Price") plus accrued interest to, but not including, the date of
redemption. The price received upon redemption may be more or less than the
amount paid by the Certificateholder depending on the value of the Bonds on
the date of tender. The value of the Bonds will fluctuate with market and
credit conditions, including any changes in interest rate levels.
Accrued interest paid on redemption shall be withdrawn from the
Interest Account or, if the balance therein is insufficient, from the
Principal Account. All other amounts paid on redemption shall be withdrawn
from the Principal Account. In addition, the Trustee is empowered, with
certain recommendations allowed by the Sponsor, to sell Bonds in the portfolio
of each Trust to make funds available for redemption. Units redeemed shall be
canceled and not be available for reissuance.
The recognized date of tender is deemed to be the date on which Units
are received in proper form by the Trustee prior to 3:00 p.m. Central time.
Units received by the Trustee after 3:00 p.m. will be deemed to have their
recognized date of tender on the next business day on which the New York Stock
Exchange is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the Redemption Price
computed on that day (see "Evaluation of the Trust").
To the extent that Bonds in the portfolio of a Trust are sold to meet
redemptions, the size and diversity of such Trust will be reduced. Such sales
may occur at a time when Bonds might not otherwise be sold which may result in
lower prices received on the Bonds than might be realized under normal trading
conditions.
Under regulations issued by the Internal Revenue Service, the Trustee
will be required to withhold a specified percentage of the principal amount of
a Unit redemption if the Trustee has not been furnished the redeeming
Certificateholder'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 Certificateholder only when filing his or
her tax return. Under normal circumstances the Trustee obtains the
Certificateholder's tax identification number from the selling broker at the
time the certificate is issued, and this number is printed on the certificate
and on distribution statements. If a Certificateholder's tax identification
number does not appear on the certificate or statements, or if it is
incorrect, the Certificateholder should contact the Trustee before presenting
a certificate for redemption to determine what action, if any, is required to
avoid this back-up withholding.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than for
customary weekend and holiday closings, or during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the Bonds
is not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit.
The Trustee shall notify the Sponsor of any tender of Units for
redemption. If the Sponsor's Repurchase Price in the secondary market at that
time equals or exceeds the redemption price, it may purchase such Units by
notifying the Trustee before the close of business on the second succeeding
business day and by making payment therefor to the tendering Certificateholder
not later than the day on which payment would otherwise have been made by the
Trustee. The Public Offering Price of any Units thus acquired by the Sponsor
will be in accord with the procedure described in the then currently effective
prospectus relating to such Units. Units held by the Sponsor may be tendered
to the Trustee for redemption. Any profit or loss resulting from the resale
or redemption of such Units will belong to the Sponsor.
Although not obligated to do so, the Sponsor intends to maintain a
market for the Units offered hereby and to offer continuously to purchase such
Units at prices, subject to change at any time, based upon the aggregate bid
prices of the Bonds in a portfolio plus interest accrued to the date of
settlement plus any principal cash on hand, less any amounts representing
taxes or other governmental charges payable out of a Trust and less any
accrued Trust expenses. If the supply of Units exceeds demand or if some
other business reason warrants it, the Sponsor may either discontinue all
purchases of Units or discontinue purchases of Units at such prices. In the
event that a market is not maintained for the Units and the Certificateholder
cannot find another purchaser, a Certificateholder desiring to dispose of his
Units may be able to dispose of such Units only by tendering them to the
Trustee for redemption at the redemption price, which is based upon the
aggregate bid prices of the Bonds in a portfolio. The aggregate bid prices of
the underlying Bonds in a Trust are expected to be less than the related
aggregate offering prices. A Certificateholder who wishes to dispose of his
Units should inquire of his 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.
Distribution of Interest and Principal
Interest received by a Trust, including that part of the proceeds from
the disposition of Bonds, if any, which represents accrued interest, is
credited by the Trustee to the Interest Account. Any other receipts are
credited to the Principal Account. Interest received by a Trust will be
distributed on or shortly after the first day of each month on a pro rata
basis to Certificateholders of record as of the preceding record date (which
is the fifteenth day of the month next preceding the distribution). All
distributions will be net of applicable expenses. The pro rata share of cash
in the Principal Account will be computed on the fifteenth day of each month
and will be distributed to Certificateholders as of the first day of the next
succeeding month. Such principal distribution may be combined with any
interest distribution due to the Certificateholder at that time. Proceeds
received from the disposition of any of the Bonds in the portfolio of a Trust
after each record date and prior to the following distribution date will be
held in the Principal Account and not distributed until the next distribution
date. The Trustee is not required to pay interest on funds held in the
Principal or Interest Accounts (but may itself earn interest thereon and
therefore benefit from the use of such funds) nor to make a distribution from
the Principal Account unless the amount available for distribution shall equal
at least $1.00 per Unit.
The distribution to the Certificateholders as of each record date will
be made on the following distribution date or shortly thereafter and shall
consist of an amount substantially equal to the Certificateholder's pro rata
share of the estimated annual income after deducting estimated expenses.
Because interest payments are not received by a Trust at a constant rate
throughout the year, such interest distribution may be more or less than the
amount credited to the Interest Account as of the record date. For the
purpose of minimizing fluctuations in the distributions from the Interest
Account, the Trustee is authorized to advance such amounts as may be necessary
to provide interest distributions of approximately equal amounts. The Trustee
shall be reimbursed, without interest, for any such advances from funds in the
Interest Account on the ensuing record date. A person who purchases Units
will commence receiving distributions only after such person becomes a record
owner. Notification to the Trustee of the transfer of Units is the
responsibility of the purchaser, but in the normal course of business such
notice is provided by the selling broker/dealer.
As of the fifteenth day of each month, the Trustee will deduct from the
Interest Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of a Trust (see
"Expenses of the Trusts"). The Trustee may also withdraw from said accounts
an amount, if deemed necessary, to fund a reserve for any governmental charges
or anticipated Trust expenses which may be payable out of the Trust. Amounts
so withdrawn will not be considered a part of the Trust's assets until such
time as the Trustee shall return all or part of the amount withdrawn to the
appropriate accounts. In addition, the Trustee may withdraw from the Interest
and Principal Accounts such amounts as may be necessary to cover redemptions
of Units by the Trustee (See "Description of Trust Portfolios" and "Redemption
and Repurchase of Units").
Funds which are available for future distributions, redemptions and
payment of expenses are held in accounts which are non-interest bearing to
Certificateholders and are available for use by the Trustee pursuant to normal
banking procedures.
Distribution Reinvestment Option
The Sponsor has entered into arrangements with Ranson Managed
Portfolios - The Kansas Municipal Fund (the "Kansas Municipal Fund"), Ranson
Managed Portfolios - The Kansas Insured Municipal Fund-Limited Maturity (the
"Kansas Insured Municipal Fund") and Ranson Managed Portfolios - The Nebraska
Municipal Fund (the "Nebraska Municipal Fund") which permit any
Certificateholder of a Kansas Trust to elect to have each distribution of
interest income or principal, including capital gains, on his Units
automatically reinvested in shares of the Kansas Municipal Fund or the Kansas
Insured Municipal Fund, respectively and which permit any Certificateholder of
a Nebraska Trust to elect to have each distribution of interest income or
principal, including capital gains, on his Units automatically reinvested in
shares of the Nebraska Municipal Fund. The investment objective of each of
the Kansas Municipal Fund and the Kansas Insured Municipal Fund is to provide
its shareholders with a high level of current income exempt from both Federal
income tax and Kansas income tax as is consistent with preservation of
capital. The investment objective of the Nebraska Municipal Fund is to
provide its shareholders with as high a level of current income exempt from
both Federal income tax and Nebraska income tax as is consistent with
preservation of capital. The objectives and policies of the Kansas Municipal
Fund, the Kansas Insured Municipal Fund and the Nebraska Municipal Fund are
presented in more detail in the Kansas Municipal Fund, the Kansas Insured
Municipal Fund and the Nebraska Municipal Fund prospectuses, respectively.
Certificateholders should contact the broker from whom they obtained this
Prospectus to obtain a current prospectus for the Kansas Municipal Fund, the
Kansas Insured Municipal Fund and the Nebraska Municipal Fund, or they may
obtain a current prospectus by contacting Ranson Capital Corporation at (800)
345-2363.
Certificateholders will be able to reinvest their distributions of
interest income or principal in the Kansas Municipal Fund, the Kansas Insured
Municipal Fund or the Nebraska Municipal Fund with no sales charge and no
minimum investment.
A Certificateholder may at any time, by so notifying the Trustee in
writing, elect to terminate his participation in the Distribution Reinvestment
Option and receive future distributions on his Units in cash. There will be
no charge or other penalty for such termination. The Sponsor and the Kansas
Municipal Fund, the Kansas Insured Municipal Fund and the Nebraska Municipal
Fund each have the right to terminate the Distribution Reinvestment Option, in
whole or in part.
Tax Status (Federal, State, Capital Gains)
At the respective times of issuance of the Bonds, opinions relating to
the validity thereof, to the exemption of interest thereon from Federal, from
state income taxation when held by residents of the state where the issuers of
the Bonds in such Trust are located and, in the case of a Kansas Trust, to the
exemption from local Kansas intangible personal property taxes were rendered
by bond counsel to the respective issuing authorities. Gain realized on the
sale or redemption of the Bonds by the Trustee or of a Unit by a
Certificateholder is, however, includable in gross income for Federal and
state income tax purposes. It should also be noted in this connection that
such gain does not include any amounts received in respect of accrued interest
or earned original issue discount, if any. It should be noted that under
provisions of the Revenue Reconciliation Act of 1993 (the "Tax Act") described
below that subject accretion of market discount on tax-exempt bonds to
taxation as ordinary income, gain realized on the sale or redemption of Bonds
by the Trustee or of Units by a Certificateholder that would have been treated
as capital gain under prior law is treated as ordinary income to the extent it
is attributable to accretion of market discount. Market discount can arise
based on the price the Trust pays for Bonds or the price a Certificateholder
pays for his or her Units. Neither the Sponsor nor its counsel have made any
special review for the Trust of the proceedings relating to the issuance of
the Bonds or of the bases for such opinions.
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 interest and accrued original
issue discount on the Bonds which is excludable from gross income under the
Internal Revenue Code of 1986 (the "Code") will retain its status when
distributed to Certificateholders. A Certificateholder's share of the
interest on certain Bonds in each Trust will be included as an item of tax
preference for both individuals and corporations subject to the alternative
minimum tax ("AMT Bonds"). In the case of certain corporations owning Units,
interest and accrued original issue discount with respect to Bonds other than
AMT Bonds held by a Trust may be subject to the alternative minimum tax, an
additional tax on branches of foreign corporations and the environmental tax
(the "Superfund Tax");
(2) exemption of interest and accrued original issue
discount on any Bonds for Federal income tax purposes does not necessarily
result in tax exemption under the laws of the several states as such laws vary
with respect to the taxation of such Bonds and in many states all or a part of
such interest and accrued original issue discount may be subject to tax; and
(3) each Certificateholder is considered to be the owner of
a pro rata portion of the Trust under subpart E, subchapter J of chapter 1 of
the Code and will have a taxable event when the Trust disposes of a Bond or
when the Certificateholder redeems or sells Units. Certificateholders must
reduce the tax basis of their Units for their share of accrued interest
received, if any, on Bonds delivered after the date the Certificateholders pay
for their Units and, consequently, such Certificateholders may have an
increase in taxable gain or reduction in capital loss upon the disposition of
such Units. Gain or loss upon the sale or redemption of Units is measured by
comparing the proceeds of such sale or redemption with the adjusted basis of
the Units. If the Trustee disposes of Bonds (whether by sale, payment on
maturity, redemption or otherwise), gain or loss is recognized to the
Certificateholder. The amount of any such gain or loss is measured by
comparing the Certificateholder's pro rata share of the total proceeds from
such disposition with Certificateholder's basis for his or her fractional
interest in the asset disposed of. In the case of a Certificateholder who
purchases Units, such basis (before adjustment for earned original issue
discount and amortized bond premium, if any) is determined by apportioning the
cost of the Units among each of the Trust assets ratably according to value as
of the date of acquisition of the Units. The basis of each Unit and of each
Bond 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 Bond which was purchased by the Trust at a premium must be reduced by the
annual amortization of Bond premium. The tax cost reduction requirements of
said Code relating to amortization of bond premium may, under some
circumstances, result in the Certificateholder realizing a taxable gain when
his Units are sold or redeemed for an amount equal to his original cost. A
Certificateholder will realize a taxable gain when his Units are sold or
redeemed for an amount greater than his adjusted basis in his Units at the
time of such sale or redemption.
Sections 1288 and 1272 of the Code provide a complex set of rules
governing the accrual of original issue discount. These rules provide that
original issue discount accrues either on the basis of a constant compound
interest rate or ratably over the term of the Bond, depending on the date the
Bond was issued. In addition, special rules apply if the purchase price of a
Bond exceeds the original issue price plus the amount of original issue
discount which accrued to prior owners. The application of these rules will
also vary depending on the value of the Bond on the date a Certificateholder
acquires his Units and the price the Certificateholder pays for his Units.
Investors with questions regarding these Code sections should consult with
their tax advisers. See "Trust Portfolio" in Part One for information
relating to Bonds, if any, issued at an original issue discount.
The Tax Act subjects tax-exempt bonds to the market discount rules of
the Code effective for bonds purchased after April 30, 1993. In general,
market discount is the amount (if any) by which the stated redemption price at
maturity exceeds an Investor's purchase price (except to the extent that such
difference, if any, is attributable to original issue discount not yet
accrued), subject to a statutory de minimis rule. Under the Tax Act,
accretion of market discount is taxable as ordinary income; under prior law
the accretion had been treated as capital gain. Market discount that accretes
while a Trust holds a Bond would be recognized as ordinary income by the
Certificateholders when principal payments are received on the Bond, upon sale
or at redemption (including early redemption) or upon the sale of redemption
of the Units, unless a Certificateholder elects to include market discount in
taxable income as it accrues. The market discount rules are complex and
Certificateholders should consult their tax advisers regarding these rules and
their application.
Interest on certain "specified private activity bonds" held by a Trust
will be treated as an item of tax preference for purposes of computing the
alternative minimum tax of all Certificateholders of such Trust, including
individuals. As a result, such interest income may be subject to the
alternative minimum tax. Such Trust will annually supply Certificateholders
with information regarding the amount of Trust income attributable to those
"specified private activity bonds" held by such Trust that give rise to a
specific item of tax preference. Certificateholders should consult their tax
adviser regarding the potential application of the alternative minimum tax and
the impact of a portion of a Trust's income being characterized as a tax
preference.
For purposes of computing the alternative minimum tax for individuals
and corporations and the Superfund Tax for corporations, interest on certain
private activity bonds (which includes most industrial and housing revenue
bonds) issued on or after August 8, 1986 such as the AMT Bonds, is included as
an item of tax preference.
In the case of corporations, for taxable years beginning after December
31, 1986, the alternative minimum tax and the Superfund Tax depend upon the
corporation's alternative minimum taxable income, which is the corporation's
taxable income with certain adjustments. One of the adjustment items used in
computing the alternative minimum taxable income and the Superfund Tax of a
corporation (other than an S Corporation, Regulated Investment Company, Real
Estate Investment Trust, or REMIC) is an amount equal to 75% of the excess of
such corporation's "adjusted current earnings" over an amount equal to its
alternative minimum taxable income (before such adjustment item and the
alternative tax net operating loss deduction). "Adjusted current earnings"
includes all tax exempt interest, including interest on the Bonds in a Trust.
Corporate Certificateholders are urged to consult their tax advisers with
respect to the particular tax consequences to them, including the corporate
alternative minimum tax, Superfund Tax and the branch profits tax imposed by
Section 884 of the Code. In addition, certain "S" corporations may have a tax
imposed on passive income including tax-exempt interest, such as interest on
the Bonds.
The Code provides that interest on indebtedness incurred or continued
to purchase or carry obligations, the interest on which is wholly exempt from
Federal income taxes, is not deductible. Because each Certificateholder is
treated for Federal income tax purposes as the owner of a pro rata share of
the Bonds owned by a Trust, interest on borrowed funds used to purchase or
carry Units of such Trust will not be deductible for Federal income tax
purposes. Under rules used by the Internal Revenue Service for determining
when borrowed funds are considered used for the purpose of purchasing or
carrying particular assets, the purchase of Units may be considered to have
been made with borrowed funds even though the borrowed funds are not directly
traceable to the purchase of Units. However, these rules generally do not
apply to interest paid on indebtedness incurred for expenditures of a personal
nature such as a mortgage incurred to purchase or improve a personal
residence. Federally tax-exempt income, including income on Units of a Trust,
will be taken into consideration in computing the portion, if any, of social
security benefits received that will be included in a taxpayer's gross income
subject to Federal income tax. It should be noted that under the Tax Act, the
portion of social security benefits subject to inclusion in taxable income has
been raised for taxable years starting in 1994. Under Section 265 of the
Code, certain financial institutions that acquire Units would generally not be
able to deduct any of the interest expense attributable to ownership of such
Units. Investors with questions regarding these issues should consult with
their tax advisers.
For taxpayers other than corporations, net capital gains are subject to
a maximum rate of 28 percent. However, it should be noted that legislative
proposals are made from time to time that affect tax rates and could affect
relative differences at which ordinary income and capital gains are taxed.
The Tax Act raised tax rates on ordinary income while capital gains
remain subject to a 28% maximum stated rate for taxpayers other than
corporations. Because some or all capital gains are taxed at a comparatively
lower rate under the Tax Act, the Tax Act includes a provision that
recharacterizes capital gains as ordinary income in the case of certain
financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Certificateholders and
prospective investors should consult with their tax advisers regarding the
potential effect of this provision on their investment in Units.
Under the code, taxpayers must disclose to the Internal Revenue Service
the amount of tax-exempt interest earned during the year.
In the case of certain of the Bonds in the Trusts, the opinions of bond
counsel indicate that interest on such securities received by a "substantial
user" of the facilities being financed with the proceeds of these securities,
or persons related thereto, for periods while such securities are held by such
a user or related person, will not be excludable from Federal gross income,
although interest on such securities received by others would be excludable
from Federal gross income. "Substantial user" and "related person" are
defined under U.S. Treasury Regulations. Any person who believes that he or
she may be a "substantial user" or a "related person" as so defined should
contact his or her tax adviser.
In the opinion of Chapman and Cutler, counsel for the Sponsor, assuming
interest on the Bonds is excludable from gross income under Section 103 of the
Internal Revenue Code of 1986 as amended, under existing Kansas law;
Kansas Taxation. Each Kansas Trust is not an association taxable as a
corporation for Kansas income tax purposes;
Each Certificateholder of a Kansas Trust will be treated as the owner
of a pro rata portion of such Kansas Trust, and the income and deductions of
such Kansas Trust will therefore be treated as income of the Certificateholder
under Kansas law;
Interest on Bonds issued after December 31, 1987 by the State of Kansas
or any of its political subdivisions will be exempt from income taxation
imposed on individuals, corporations and fiduciaries (other than insurance
companies, banks, trust companies or savings and loan associations) however,
interest on Bonds issued prior to January 1, 1988 by the State of Kansas or
any of its political subdivisions will not be exempt from income taxation
imposed on individuals, corporations and fiduciaries (other than insurance
companies, banks, trust companies or savings and loan associations) unless the
laws of the State of Kansas authorizing the issuance of such Bonds
specifically exempt the interest on the Bonds from income taxation by the
State of Kansas;
Interest on Bonds issued by the State of Kansas or any of its political
subdivisions will be subject to the tax imposed on banks, trust companies and
savings and loan associations under Article 11, Chapter 79 of the Kansas
statutes;
Interest on Bonds issued by the State of Kansas or any of its political
subdivisions will be subject to the tax imposed on insurance companies under
Article 40, Chapter 28 of the Kansas statutes unless the laws of the State of
Kansas authorizing the issuance of such Bonds specifically exempt the interest
on the Bonds from income taxation by the State of Kansas; interest on the
Bonds which is exempt from Kansas income taxation when received by a Kansas
Trust will continue to be exempt when distributed to a Certificateholder
(other than a bank, trust company or savings and loan association);
Each Certificateholder of a Kansas Trust will recognize gain or loss
for Kansas income tax purposes if the Trustee disposes of a Bond (whether by
sale, exchange, payment on maturity, retirement or otherwise) or if the
Certificateholder redeems or sells Units of such Kansas Trust to the extent
that such transaction results in a recognized gain or loss for Federal income
tax purposes; and
Interest received by a Kansas Trust on the Bonds is exempt from
intangibles taxation imposed by any counties, cities and townships pursuant to
present Kansas law.
No opinion is expressed regarding whether the gross earnings derived
from the Units is subject to intangibles taxation imposed by any counties,
cities and townships pursuant to present Kansas law.
Nebraska Taxation. With respect to certain Bonds in a Nebraska Trust
(the "Nebraska Bonds") which may be held by such Nebraska Trust, the opinions
of bond counsel to the issuing authorities for such Bonds have indicated that
the interest on such Bonds in included in computing the Nebraska Alternative
Minimum Tax imposed by Section 77-2715(2) of the Revised Nebraska Statutes
(the "Nebraska Minimum Tax") (the "Nebraska AMT Bonds"). However, although no
opinion is expressed herein regarding such matters, it is assumed that: (i)
the Bonds were validly issued, (ii) the interest thereon is excludable from
gross income for Federal income tax purposes, (iii) none of the Bonds (other
than the Nebraska AMT Bonds, if any) are "specified private activity bonds"
the interest on which is included as an item of tax preference in the
computation of the Alternative Minimum Tax for Federal income tax purposes,
(iv) interest on the Nebraska Bonds (other than the Nebraska AMT Bonds, if
any), if received directly by a Certificateholder, would be exempt from both
the Nebraska income tax imposed by Section 77-2714 et. seq. of the Revised
Nebraska Statutes (other than the Nebraska Minimum Tax) (the "Nebraska State
Income Tax") and the Nebraska Minimum Tax imposed by Section 77-2715(2) of the
Revised Nebraska Statutes (the "Nebraska Minimum Tax") and (v) interest on the
Nebraska AMT Bonds, if any, if received directly by a Certificateholder, would
be exempt from the Nebraska State Income Tax. The opinion set forth below
does not address the taxation of persons other than full time residents of
Nebraska.
In the opinion of Chapman and Cutler under existing law and based upon
the assumptions set forth above:
(1) Each Nebraska Trust is not an association taxable as a
corporation, each Certificateholder of a Nebraska Trust will be treated as the
owner of a pro rata portion of such Nebraska Trust, and the income of such
portion of such Nebraska Trust will therefore be treated as the income of the
Certificateholder for both Nebraska State Income Tax and the Nebraska Minimum
Tax purposes;
(2) Interest on the Bonds which is exempt from both the
Nebraska State Income Tax and Nebraska Minimum Tax when received by a Nebraska
Trust, and which would be exempt from both the Nebraska State Income Tax and
the Nebraska Minimum Tax if received directly by a Certificateholder, will
retain its status as exempt from such taxes when received by such Nebraska
Trust and distributed to a Certificateholder;
(3) Interest on the Nebraska AMT Bonds, if any, which is
exempt from the Nebraska State Income Tax but is included in the computation
of the Nebraska Minimum Tax when received by a Nebraska Trust, and which would
be exempt from the Nebraska State Income Tax but would be included in the
computation of the Nebraska Minimum Tax if received directly by a
Certificateholder, will retain its status as exempt from the Nebraska State
Income Tax but included in the computation of the Nebraska Minimum Tax when
received by such Nebraska Trust and distributed to a Certificateholder;
(4) Each Certificateholder of a Nebraska Trust will
recognize gain or loss for both Nebraska State Income Tax and Nebraska Minimum
Tax purposes if the Trustee disposes of a Bond (whether by redemption, sale or
otherwise) or if the Certificateholder redeems or sells Units of such Nebraska
Trust to the extent that such a transaction results in a recognized gain or
loss to such Certificateholder for Federal income tax purposes;
(5) The Nebraska State Income Tax does not permit a
deduction for interest paid or incurred on indebtedness incurred or continued
to purchase or carry Units in a Nebraska Trust, the interest on which is
exempt from such Tax; and
(6) In the case of a Certificateholder subject to the
Nebraska financial institutions franchise tax, the income derived by such
Certificateholder from his pro rata portion of the Bonds held by a Nebraska
Trust may affect the determination of such Certificateholder's maximum
franchise tax.
Chapman and Cutler has not examined any of the Bonds to be deposited
and held in each Nebraska Trust or the proceedings for the issuance thereof or
the opinions of bond counsel with respect thereto, and therefore express no
opinion as to the exemption from either the Nebraska State Income Tax or the
Nebraska Minimum Tax of interest on the Nebraska Bonds if received directly by
a Certificateholder.
Missouri Taxation. In the opinion of Chapman and Cutler, under
Missouri law, as presently enacted and construed:
(i) Each Trust is not an association taxable as a
corporation for Missouri income tax purposes.
(ii) The Certificateholders of each Trust will be treated as
the owners of a pro rata portion of such Trust and the income of such Trust
will therefore be treated as income of the Certificateholders for Missouri
Income Tax purposes.
(iii) Each Trust will not be subject to the Kansas City,
Missouri Earnings and Profits Tax and each Certificateholder's share of income
of the Bonds held by such Trust will not generally be subject to the Kansas
City, Missouri Earnings and Profits Tax or the City of St. Louis Earnings Tax
(except in the case of certain Certificateholders, including corporations,
otherwise subject to the St. Louis City Earnings Tax).
All statements of law in the Prospectus concerning exemption from
Federal, state or other taxes are the opinion of counsel and are to be so
construed.
Expenses of the Trusts
The Sponsor will not receive any fees in connection with activities
relating to a Trust. However, for regularly evaluating the portfolio of each
Trust, the Evaluator (which is the Sponsor) will receive the annual fee
indicated in "Summary of Essential Financial Information" in Part One of this
Prospectus. Such fee is calculated based on the largest aggregate principal
amount of Bonds in a Trust at any time during such period.
The Trustee will receive for ordinary services the annual fee from each
Trust indicated in "Summary of Essential Financial Information" in Part One of
this Prospectus. Such fee is calculated based on the largest aggregate
principal amount of Bonds in a Trust at any time during such period. Both the
Trustee's fee and the evaluation fee paid to the Sponsor may be adjusted
without prior approval from Certificateholders, provided that all adjustments
upward will not exceed the cumulative percentage increase of the United States
Department of Labor's Consumer Price Index or, if such index is no longer
published, in a comparable index. Since the Trustee has the use of the funds
being held in the Principal and Interest Accounts for future distributions,
payment of expenses and redemptions and since such Accounts are non-interest
bearing to Certificateholders, the Trustee benefits thereby. Part of the
Trustee's compensation for its services to a Trust is expected to result from
the use of these funds. For a discussion of the services rendered by the
Trustee pursuant to its obligations under the Indenture, see "Trustee
Information" and "Other Rights of Certificateholders."
The following is a summary of expenses of each Trust which, when owed
to the Trustee, are secured by a lien on the assets of such Trust: (1) the
expenses and costs of any action undertaken by the Trustee to protect such
Trust and the rights and interests of the Certificateholders; (2) any taxes
and other governmental charges upon the Bonds or any part of such Trust (no
such taxes or charges are currently being levied or, to the knowledge of the
Sponsor, contemplated); (3) amounts payable to the Trustee as fees for
ordinary recurring services and for extraordinary non-recurring services
rendered pursuant to the Indenture and all disbursements and expenses
including counsel fees (including fees of counsel which the Trustee may
retain) and auditing fees sustained or incurred by the Trustee in connection
therewith; and (4) any losses or liabilities accruing to the Trustee without
negligence, bad faith or willful misconduct on its part. The Trustee is
empowered to sell Bonds in order to pay these amounts if funds are not
available in the Interest and Principal Accounts. Costs of disbursement
(including postage, checks and handling) of interest, principal and redemption
distributions will be paid by the Trustee and will not be charged to such
Trust.
Evaluation of the Trusts
The Public Offering Price and the Redemption Price per Unit are based
on the bid prices per Unit of the Bonds in the portfolio of a Trust plus
accrued interest. The Public Offering Price per Unit also includes a sales
charge as set forth in Part One of this Prospectus under "Summary of Essential
Financial Information." While the Trustee has the power to determine the
Public Offering Price per Unit and the Redemption Price per Unit when Units
are tendered for redemption, such authority has been delegated to the
Evaluator which determines the Public Offering Price per Unit and the
Redemption Price per Unit on a daily basis as of 3:00 p.m. Central time on
days the New York Stock Exchange is open (and on any other days on which
Sponsor secondary market transactions or redemptions occur). With each
evaluation the Public Offering Price per Unit and Redemption Price per Unit is
adjusted commensurate with such evaluation and prices will be effective for
all orders for purchases, sales or redemptions received at or prior to 3:00
p.m. Central time on each such day. Orders received by the Trustee or Sponsor
after that time, or on a day when no evaluation is made, will be held until
the next determination of price. Each evaluation of a Trust has been and will
be determined on the basis of cash on hand in a Trust or money in the process
of being collected, the value of the Bonds in the portfolio of a Trust based
on the bid prices of the Bonds and interest accrued thereon not subject to
collection less any taxes or governmental charges payable, any accrued
expenses of a Trust and any cash held for distribution to Certificateholders.
The result of that computation is then divided by the number of Units
outstanding as of the date thereof to determine the per Unit value of the
Trust.
The Evaluator may determine the value of the Bonds in the portfolio of
a Trust (1) on the basis of current bid prices of the Bonds obtained from
dealers or brokers who customarily deal in bonds comparable to those held in a
Trust; (2) if bid prices are not available for any of the Bonds, on the basis
of bid prices for comparable bonds; (3) by causing the value of the Bonds to
be determined by others engaged in the practice of evaluating, quoting or
appraising comparable bonds; or (4) by any combination of the above.
Other Rights of Certificateholders
The Trustee shall furnish Certificateholders in connection with each
distribution a statement of the amount of interest and, if any, the amount of
other receipts (received since the preceding distribution) being distributed,
expressed in each case as a dollar amount representing the pro rata share of
each Unit outstanding. 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 registered Certificateholder a statement (1) as
to the Interest Account: interest received (including amounts representing
interest received upon any disposition of Bonds), deductions for fees and
expenses of a Trust and for redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed in each case both
as a total dollar amount and as a dollar amount representing the pro rata
share of each Unit outstanding on the last business day of such calendar year;
(2) as to the Principal Account: the dates of disposition of any Bonds and the
net proceeds received therefrom (excluding any portion representing accrued
interest), the amount paid for redemptions of Units, if any, deductions for
payment of applicable taxes and fees and expenses of the Trustee, and the
balance remaining after such distributions and deductions expressed both as a
total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; (3) a
list of the Bonds held and the number of Units outstanding on the last
business day of such calendar year; (4) the Redemption Price based upon the
last computation thereof made during such calendar year; and (5) amounts
actually distributed during such calendar year from the Interest Account and
from the Principal Account, separately stated, expressed both as total dollar
amounts and as dollar amounts representing the pro rata share of each Unit
outstanding.
The Indenture requires each Trust to be audited on an annual basis at
the expense of such Trust by independent auditors selected by the Sponsor.
The Trustee shall not be required (in the case of Series 4 and subsequent
series), however, and does not intend to cause such an audit to be performed
if its cost to a Trust shall exceed certain specified amounts (not exceeding
$.50 per Unit) on an annual basis. Certificateholders may obtain a copy of
such audited financial statements upon request.
In order to comply with Federal and state tax reporting requirements,
Certificateholders will be furnished, upon request to the Trustee, evaluations
of the Bonds in a Trust furnished to it by the Evaluator.
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee. Ownership
of Units of a Trust is evidenced by separate registered certificates executed
by the Trustee and the Sponsor. Certificates are transferable by presentation
and surrender to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Certificateholder must sign exactly
as his name appears on the face of the certificate with the signature
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. In certain
instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority. Certificates will be
issued in denominations of one Unit or any multiple thereof. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity, evidence of ownership and payment of
expenses incurred. Mutilated certificates must be surrendered to the Trustee
for replacement. Although no such charge is now made or contemplated, the
Trustee may require a Certificateholder to pay a reasonable fee to be
determined by the Trustee for each certificate reissued or transferred and to
pay any governmental charge that may be imposed in connection with each such
transfer or interchange.
Sponsor Information
Ranson & Associates, Inc., an investment banking firm created in 1995
by a number of former owners and employees of Ranson Capital Corporation, is
the sponsor and successor sponsor of Series 1-78 of The Kansas Tax-Exempt
Trust and Multi-State Series 1-6 of The Ranson Municipal Trust and is the
Sponsor of the 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 has sold bonds and unit investment
trusts and maintained secondary market activities relating thereto. At
present, Ranson & Associates, Inc., which is a member of the National
Association of Securities Dealers, Inc., is the Sponsor to each of the
above-named unit investment trusts and serves as the financial advisor and as
an underwriter for issuers in the Midwest and Southwest, especially in Kansas,
Missouri and Texas.
The Company's offices are currently located at 120 South Market, Suite
450, Wichita, Kansas 67202. As of January 15, 1996, the total unaudited
stockholders' equity of Ranson & Associates, Inc. was $355,000. (This
paragraph relates only to the Sponsor and not to any Series of The Kansas Tax-
Exempt Trust or to any other dealer. The information is included herein only
for the purpose of informing investors as to the financial responsibility of
the Sponsor and its ability to carry out its contractual obligations. More
detailed financial information will be made available by the Sponsor upon
request.)
As stated under "Redemption and Repurchase of Units," the Sponsor
intends to maintain a secondary market for the Units of the Trusts. In so
maintaining a market, the Sponsor will realize profits or sustain losses in
the amount of any difference between the price at which Units are purchased
and the price at which Units are resold (which price is based on the bid
prices of the Bonds in each Trust and includes a sales charge as set forth in
Part One of this Prospectus under "Summary of Essential Financial
Information"). In addition, the Sponsor will also realize profits or sustain
losses resulting from a redemption of such repurchased Units at a price above
or below the purchase price for such Units.
If the Sponsor shall fail to perform any of its duties under the
Indenture or become incapable of acting or become bankrupt or its affairs are
taken over by public authorities, then the Trustee may (i) appoint a successor
Sponsor at rates of compensation deemed by the Trustee to be reasonable and
not exceeding amounts prescribed by the Securities and Exchange Commission,
(ii) terminate the Indenture and liquidate a Trust as provided therein or
(iii) continue to act as Trustee without terminating the Indenture.
Trustee Information
The Trustee, Investors Fiduciary Trust Company, is a trust company
specializing in investment services, organized and existing under the laws of
Missouri, having its trust office at 127 West 10th Street, Kansas City,
Missouri 64105. The Trustee is subject to supervision and examination by the
Division of Finance of the State of Missouri and the Federal Deposit Insurance
Corporation. The Trustee is jointly owned by DST Systems, Inc. and Kemper
Financial Services, Inc.
The duties of the Trustee are primarily ministerial in nature. It did
not participate in the selection of Bonds for the Trust portfolios. The
Trustee is empowered to sell, for the purpose of redeeming Units tendered by
any Certificateholder and for the payment of expenses for which funds may not
be available, such of the Bonds as are designated by the Sponsor as the
Trustee in its sole discretion may deem necessary. The Sponsor is empowered,
but not obligated, to direct the Trustee to dispose of Bonds upon default in
payment of principal or interest, institution of certain legal proceedings,
default under other documents adversely affecting debt service, default in
payment of principal or interest on other obligations of the same issuer,
decline in projected income pledged for debt service on revenue bonds or
decline in price or the occurrence of other market or credit factors,
including advance refunding (i.e., the issuance of refunding securities and
the deposit of the proceeds thereof in trust or escrow to retire the refunded
securities on their respective redemption dates), so that in the opinion of
the Sponsor the retention of such Bonds would be detrimental to the interest
of the Certificateholders. The Sponsor is required to instruct the Trustee to
reject any offer made by an issuer of any of the Bonds to issue new
obligations in exchange or substitution for any Bond pursuant to a refunding
or refinancing plan, except that the Sponsor may instruct the Trustee to
accept or reject such an offer or to take any other action with respect
thereto as the Sponsor may deem proper if (1) the issuer is in default with
respect to such Bond or (2) in the written opinion of the Sponsor the issuer
will probably default with respect to such Bond 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 Indenture to the
same extent as Bonds originally deposited thereunder. Within five days after
the deposit of obligations in exchange or substitution for underlying Bonds,
the Trustee is required to give notice thereof to each Certificateholder,
identifying the Bonds eliminated and the Bonds substituted therefor. Except
as stated herein, the acquisition by a Trust of any securities other than the
Bonds initially deposited is not permitted.
If any default in the payment of principal or interest on any Bond
occurs and no provision for payment is made therefor within 30 days, the
Trustee is required to notify the Sponsor thereof. If the Sponsor fails to
instruct the Trustee to sell or to hold such Bond within 30 days after
notification by the Trustee to the Sponsor of such default, the Trustee may in
its discretion sell the defaulted Bond and not be liable for any depreciation
or loss thereby incurred.
In accordance with the Indenture, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trusts. Such
records shall include the name and address of, and the certificates issued by
the Trusts to, every Certificateholder of the Trust. Such books and records
shall be open to inspection by any Certificateholder at all reasonable times
during the Trustee's 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 is required to keep
a certified copy or duplicate original of the Indenture on file in its office
available for inspection at all reasonable times during its usual business
hours by any Certificateholder, together with a current list of the Bonds held
in the Trusts.
Under the Indenture, the Trustee or any successor trustee may resign
and be discharged of the trust created by the Indenture 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
Certificateholders 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 remove the Trustee and appoint a
successor trustee as provided in the Indenture at any time with or without
cause. Notice of such removal and appointment shall be mailed to each
Certificateholder 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
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which a Trustee shall be a party, shall be the successor trustee. The
Trustee must be a corporation organized under the laws of the United States,
or any state thereof, be authorized under such laws to exercise trust powers
and have at all times an aggregate capital, surplus and undivided profits of
not less than $5,000,000.
Legal and Auditing Matters
The legality of the Units offered hereby and certain matters relating
to Federal, Kansas and Nebraska tax law have been passed upon by Chapman and
Cutler, Chicago, Illinois, as special counsel for the Sponsor.
The statements of net assets, including the Trust portfolios, of each
Trust, included in Part One of this Prospectus and Registration Statement have
been audited by Allen, Gibbs & Houlik, L.C., independent auditors, as set
forth in their report appearing in Part One of this Prospectus, and is
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
Description of Bond Ratings
Standard & Poor's Corporation. A description of the applicable
Standard & Poor's Corporation rating symbols and their meanings follows:
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
debt obligation. This assessment may take into consideration obligors such as
guarantors, insurers or lessees.
The bond rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability
for a particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable.
Standard and Poor's does not perform an audit in connection with any rating
and may, on occasion, rely on unaudited financial information. The ratings
may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
1) Likelihood of default-capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;
2) Nature of and provisions of the obligation; and
3) Protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization or other arrangements
under the laws of bankruptcy and other laws affecting creditors' rights.
AAA-This is the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA-Bonds rated AA have a very strong capacity to pay interest and repay
principal, and differ from the highest rated issues only in small degree.
A-Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB-Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in the higher rated
categories.
Plus (+) or Minus (-): The ratings from "AA" to "BB" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
Provisional Ratings. The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent
upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion. Accordingly, the investor should exercise his
own judgment with respect to such likelihood and risk.
L: The letter "L" indicates that the rating pertains to the principal
amount of those bonds where the underlying deposit collateral is fully insured
by the Federal Savings & Loan Insurance Corp. or the Federal Deposit Insurance
Corp.
Moody's Investors Service, Inc. A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings follows:
Aaa-Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large, or by an
exceptionally stable, margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Their safety is so absolute that, with the occasional exception of oversupply
in a few specific instances, characteristically, their market value is
affected solely by money market fluctuations.
Aa-Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. Their market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in a few specific
instances.
A-Bonds which are rated A possess favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to some degree by
economic performance during a sustained period of depressed business
conditions, but, during periods of normalcy, A-rated bonds frequently move in
parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.
Baa-Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well. The market value of Baa-rated bonds is more sensitive to changes in
economic circumstances, and aside from occasional speculative factors applying
to some bonds of this class, Baa market valuations move in parallel with Aaa,
Aa and A obligations during periods of economic normalcy, except in instances
of oversupply.
Moody's bond rating symbols may contain numerical modifiers of a
generic rating classification. The modifier 1 indicates that the bond ranks
at the high end of its category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
Con. (-)-Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
No person is authorized to give any information or to make any
representations not contained in this Prospectus; and any information or
representation not contained herein must not be relied upon as having been
authorized by the Trust, or the Sponsor or any dealer. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy,
securities in any state to any person to whom it is not lawful to make such
offer in such state.
This Prospectus contains information concerning the Trust and the
Sponsor, but does not contain all of the information set forth in the
registration statement and exhibits relating thereto, which the Trust has
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933 and the Investment Company Act of 1940, and to which
reference is hereby made.
Table of Contents
Title Page
General Summary of Information 1
Summary of the Trusts 3
Description of Trust Portfolios 5
Objectives of the Trusts 12
Estimated Current Return and Estimated Long-Term Return 13
Public Offering Information 13
Accrued Interest to Carry 14
Redemption and Repurchase of Units 14
Distribution of Interest and Principal 16
Distribution Reinvestment Option 17
Tax Status (Federal, State, Capital Gains) 18
Expenses of the Trusts 25
Evaluation of the Trusts 26
Other Rights of Certificateholders 26
Sponsor Information 28
Trustee Information 28
Legal and Auditing Matters 30
Description of Bond Ratings 30
Contents of Post-Effective Amendment
to Registration Statement
This Post-Effective Amendment to the Registration Statement comprises
the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
S-1
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, The Ranson Municipal Trust, Multi-State Series 2, certifies that
it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Post-Effective Amendment to its Registration Statement to be
signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the City of Wichita and State
of Kansas on the 10th day of May, 1996.
The Ranson Municipal Trust, Multi-State Series 2
(Registrant)
By Ranson & Associates, Inc.
(Depositor)
Attest John A. Ranson
----------------------
President and Director
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this Post
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities on May 10, 1996:
Signature Title
- ------------------ -------------------------
John A. Ranson President and Director )
)
Alex R. Meitzner Chairman of the Board )
)
)
Robin K. Pinkerton Secretary, Treasurer and )
Director ) John A. Ranson
----------------------
President and Director
* 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 (33-47687) and the same are hereby incorporated herein by
this reference.
S-2
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<APPREC-INCREASE-CURRENT> 152,569
<NET-CHANGE-FROM-OPS> 242,996
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 102,581
<DISTRIBUTIONS-OF-GAINS> 0
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<NET-CHANGE-IN-ASSETS> 8,435
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