File No. 33-53035 CIK #921463
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
Kemper Equity Portfolio Trust, Series 7
Name and executive office address of Depositor:
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
Name and complete address of agent for service:
Robin Pinkerton
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 67206
( X ) Check box if it is proposed that this filing will
become effective at 2:00 p.m. on April 30, 1997
pursuant to paragraph (b) of Rule 485.
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KEMPER EQUITY PORTFOLIO TRUSTS
PART ONE
Kemper Equity Portfolio Trusts, were formed with the investment
objectives of obtaining maximum capital appreciation and, in certain
Trusts, dividend income through investment in a fixed portfolio of equity
securities of companies selected to achieve the Trusts' objectives and in
certain Trusts, the securities are concentrated within a specific
industry. Certain Trusts include common stocks of foreign issuers which
are in American Depositary Receipt ("ADR") form. On the Initial Date of
Deposit, the Securities selected for each Trust were considered to have
the potential to achieve the Trust's objectives over the term of such
Trust. See "Schedule of Investments" in Part Two for each Trust. There is
no assurance that the Trusts will achieve their objectives.
SPONSOR: RANSON & ASSOCIATES, INC.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The investor is advised to read and retain both parts of
this Prospectus for future reference.
The date of this Part One is that date which
is set forth in Part Two of the Prospectus
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TABLE OF CONTENTS
PAGE
SUMMARY 3
THE TRUST FUNDS 4
PORTFOLIOS 5
Securities Selection 5
RISK FACTORS 5
FEDERAL TAX STATUS 11
PUBLIC OFFERING OF UNITS 16
Public Offering Price 16
Public Distribution of Units 17
Sponsor Profits 18
MARKET FOR UNITS 19
REDEMPTION 19
General 19
Computation of Redemption Price 21
RETIREMENT PLANS 22
UNITHOLDERS 23
Ownership of Units 23
Distributions to Unitholders 24
Distribution Reinvestment 25
Statements to Unitholders 25
Rights of Unitholders 27
INVESTMENT SUPERVISION 27
ADMINISTRATION OF THE TRUSTS 27
The Trustee 27
The Sponsor 28
The Evaluator 29
Amendment and Termination 29
Limitations on Liability 31
EXPENSES OF THE TRUSTS 31
LEGAL OPINIONS 32
INDEPENDENT AUDITORS 32
This Prospectus does not contain all of the information with respect
to the investment company set forth in its registration statement and
exhibits relating thereto which have been 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.
No person is authorized to give any information or to make any
representations with respect to this investment company not contained in
this Prospectus; and any information or representation not contained
herein must not be relied upon as having been authorized by the Trusts,
the Trustee, or the Sponsor. Such registration does not imply that the
Trusts or the Units have been guaranteed, sponsored, recommended or
approved by the United States or any state or any agency or officer
thereof.
This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any person to
whom it is not lawful to make such offer in such state or country.
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SUMMARY
The Trust Funds. Kemper Equity Portfolio Trusts, (the "Trust Funds"
or "Trusts") are separate and distinct unit investment trusts registered
under the Investment Company Act of 1940. Ranson & Associates, Inc. is
the Sponsor and Evaluator of the Trusts and is successor sponsor and
evaluator of all unit investment trusts formerly sponsored by EVEREN Unit
Investment Trusts, a service of EVEREN Securities, Inc. The Bank of New
York is the Trustee of the Trusts as successor to Investors Fiduciary
Trust Company.
The Trust Funds consist of common stocks issued by companies which
the Sponsor believes have the potential to achieve the objectives of the
respective Trust (the "Equity Securities" or "Securities"). For the
criteria used by the Sponsor in selecting the Securities, see
"Portfolios-Securities Selection." The value of all portfolio Securities
and, therefore, the value of the Units may be expected to fluctuate in
value depending on the full range of economic and market influences
affecting corporate profitability, the financial condition of issuers and
the prices of equity securities in general and the Securities in
particular. Maximum capital appreciation and, if applicable, dividend
income are, of course, dependent upon several factors including, among
other factors, the financial condition of the issuers of the Securities
(see "Portfolios").
Each Unit of a Trust offered represents that undivided interest in
that Trust indicated under "Essential Information" in Part Two for each
Trust. 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 accordingly, although the actual interest in the Trust
represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Unitholders,
which may include the Sponsor or the Underwriters, or until the
termination of the Trust Agreement.
Public Offering Price. The secondary market Public Offering Price
will be equal to the aggregate underlying bid value of the Securities in
a Trust Fund, plus or minus a pro rata share of cash, if any, in the
Capital Account held or owned by such Trust Fund, plus a sales charge set
forth under "Public Offering of Units-Public Offering Price." The sales
charge is reduced on a graduated scale for sales involving at least
10,000 Units of a Trust or $100,000 and will be applied on whichever
basis is more favorable to the investor.
Distributions of Income and Capital. Distributions of dividends
received by each Trust and any funds in the Capital Account will be made
quarterly. See "Unitholders-Distributions to Unitholders."
Reinvestment. Each Unitholder of the Trust Funds may elect to have
distributions of income, capital gains and/or capital on their Units
automatically invested in shares of any Zurich Kemper Investments, Inc.
front-end load mutual fund (other than those funds sold with a contingent
deferred sales charge). Such distributions will be reinvested without
charge to the participant on each applicable Distribution Date. See
"Unitholders-Distribution Reinvestment." A current prospectus for the
reinvestment fund selected, if any, will be furnished to any investor who
desires additional information with respect to reinvestment.
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Market for Units. While under no obligation to do so, the Sponsor
intends to, and certain of the other dealers may, maintain a market for
the Units of the Trusts and offer to repurchase such Units at prices
subject to change at any time which are based on the current underlying
bid prices of the Securities in the Trust Fund involved. If the supply of
Units exceeds demand or if some other business reason warrants it, the
Sponsor and/or the dealers may either discontinue all purchases of Units
or discontinue purchases of Units at such prices. A Unitholder may also
dispose of Units through redemption at the Redemption Price on the date
of tender to the Trustee. See "Redemption-Computation of Redemption
Price."
Redemption In Kind. Upon redemption of Units of a Trust Fund a
Unitholder generally may request to receive in lieu of cash his share of
each of the Securities then held by the Trust Fund, if he would be
entitled to receive at least $50,000 ($25,000 for certain Trusts) of
proceeds and he has tendered for redemption prior to that date set forth
in Part Two for each Trust (see "Redemption" and "Administration of the
Trusts-Amendment and Termination").
Termination. No later than the date specified under the Liquidation
Period in "Essential Information" in Part Two, Securities will begin to
be sold in connection with the termination of a Trust Fund and it is
expected that all Securities in such Trust Fund will be sold by the
Mandatory Termination Date set forth in "Essential Information" in Part
Two for each Trust. The Sponsor will determine the manner, timing and
execution of the sale of the underlying Securities. See "Administration
of the Trusts-Amendment and Termination."
Risk Factors. An investment in Units should be made with an
understanding of the risks associated therewith, including the possible
deterioration of either the financial condition of the issuers or the
general condition of the stock market. For certain risk considerations
related to the Trusts, see "Risk Factors."
THE TRUST FUNDS
Kemper Equity Portfolio Trusts are unit investment trusts created
under the laws of the State of Missouri pursuant to a trust indenture
dated the Initial Date of Deposit (the "Trust Agreements"). Ranson &
Associates, Inc. is the Sponsor and Evaluator of the Trusts and is
successor sponsor and evaluator of all unit investment trusts formerly
sponsored by EVEREN Unit Investment Trusts, a service of EVEREN
Securities, Inc. The Bank of New York is the Trustee of the Trusts as
successor to Investors Fiduciary Trust Company.
The portfolio of each Trust contains common stocks issued by
different companies selected for the purpose of obtaining maximum capital
appreciation and, in certain Trusts, dividend income. Certain Trusts
include common stocks of foreign issuers in American Depositary Receipt
("ADR") form. Certain Trusts are concentrated within a specific
industry. As used herein, the term "Securities" means the common stocks
initially deposited in each Trust Fund and described in the portfolio and
any additional common stocks acquired and held by a Trust Fund pursuant
to the provisions of the Trust Agreement.
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PORTFOLIOS
Securities Selection. At all times each Trust will hold at least
80% of its assets in equity securities. In selecting Securities for the
Trust, the following factors, among others, were considered at the
Initial Date of Deposit by EVEREN Securities, Inc. (the Sponsor at such
time): (a) the quality of the Securities, (b) the yield and price of the
Securities relative to other similar securities, (c) the potential for
capital appreciation and (d) for certain Trusts, the likelihood that
earnings and dividends will continue or increase.
In connection with Kemper Equity Portfolio Trusts, Series 4 (Utility
Companies), the stability of utility stocks was also considered.
Utilities tend to be more stable than other companies because they are
monopolies that provide essential services. In times of economic slowdown
or recovery, people still need to use the power of utility companies. Due
to the expected slowdown of nuclear construction programs and the
decrease in excess energy capacity, EVEREN Securities, Inc. considered
both the historical stability of the utility sector as well as the
potential for dividend growth by specific companies in the sector.
In selecting securities for Kemper Equity Portfolio Trusts, Series 8
(Banking Institutions), EVEREN Securities, Inc. also considered the
potential benefit to the issuer of the Securities from the continued
consolidation within the banking industry and improving industry
fundamentals.
In selecting the Securities for each Trust, EVEREN Securities, Inc.
chose equity securities that in its view had the potential for capital
appreciation at the Initial Date of Deposit. Although there can be no
assurance that such Securities will appreciate in value over the life of
the Trusts, over time stock investments have generally out-performed most
other asset classes. However, it should be remembered that common stocks
carry greater risks, including the risk that the value of an investment
can go down (see "Risk Factors-Certain Investment Considerations"), and
past performance is no guarantee of future results.
For specific information and the market price of each Security as of
the date of this Part One Prospectus, see "Schedule of Investments" in
Part Two for such Trust.
RISK FACTORS
General. Each Trust Fund may be an appropriate investment vehicle
for investors who desire to participate in a portfolio of equity
securities with greater diversification than they might be able to
acquire individually. An investment in Units of the Trust Funds should be
made with an understanding of the risks inherent in an investment in
equity securities, including the risk that the financial condition of the
issuers of the Securities may become impaired or that the general
condition of the stock market may worsen (both of which may contribute
directly to a decrease in the value of the Securities and thus in the
value of the Units) or the risk that holders of common stock have a right
to receive payments from the issuers of those stocks that is generally
inferior to that of creditors of, or holders of debt obligations issued
by, the issuers and that the rights of holders of common stock generally
rank inferior to the rights of holders of preferred stock. Common stocks
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are especially susceptible to general stock market movements and to
volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. These perceptions are based on
unpredictable factors including expectations regarding government,
economic, monetary and fiscal policies, inflation and interest rates,
economic expansion or contraction, and global or regional political,
economic or banking crises.
Banking Institutions. Certain Trusts may be concentrated in common
stocks issued by companies in the banking industry. In view of this, an
investment in Units of such Trusts should be made with an understanding
of the problems and risks inherent in the banking industry in general.
Commercial banks and their holding companies are especially subject to
the adverse effects of economic recession, volatile interest rates,
portfolio concentrations in geographic markets and in commercial and
residential real estate loans, and competition from new entrants in their
fields of business. Economic conditions in the real estate markets, which
have been weak in the recent past, can have a significant effect upon
banks because they generally have a substantial percentage of their
assets invested in loans secured by real estate, as has recently been the
case for a number of banks with respect to commercial real estate in the
northeastern and southwestern regions of the United States. Commercial
banks and their holding companies are subject to extensive federal
regulation and, when such institutions are state-chartered, to state
regulation as well. Regulatory actions, such as increases in the minimum
capital requirements applicable to commercial banks and increases in
deposit insurance premiums required to be paid by commercial banks to the
FDIC, can negatively impact earnings and the ability of a company to pay
dividends. Neither federal insurance of deposits nor governmental
regulation, however, ensures the solvency or profitability of commercial
banks or their holding companies, or insures against any risk of
investment in the securities issued by such institutions.
There has been much recent attention focused on the thrift and
banking industries regarding prospects for legislative and regulatory
changes which could have a material impact on investments in banking
institutions. In December 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 was enacted providing, among other things, for an
increase of supervisory authority over financial institutions. Additional
legislative and regulatory changes may be forthcoming. For example, the
deposit insurance system is under review by Congress and federal
regulators and proposed reforms of that system could, among other things,
restrict the ways in which deposited moneys can be used by banks or
reduce the dollar amount or number of deposits insured for any depositor.
Such reforms could reduce profitability as investment opportunities
available to banking institutions become more limited and as consumers
look more actively for savings vehicles other than bank deposits.
Legislation broadening bank powers also is being studied by Congress
which, if enacted, could provide new earnings opportunities for banks but
would also further expose banks to well-established competitors, such as
securities firms and insurance companies, as well as companies engaged in
other areas of business if Congress were to eliminate the historic
barriers between commerce and banking. Increased competition may result
from broadening national interstate banking powers, including interstate
branching, as has been recently proposed. The Sponsor makes no prediction
as to what, if any, manner of bank regulatory reform might ultimately be
adopted or what ultimate effect such reform might have on a Trust's
portfolio.
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Utility Companies. Certain Trusts may be concentrated in common
stocks issued by companies in the public utilities industry. An
investment in Units of these Trusts should be made with an understanding
of the characteristics of the public utility industry and the risks which
such an investment may entail. General problems of such issuers would
include the difficulty in financing large construction programs in an
inflationary period, the limitations on operations and increased costs
and delays attributable to environmental considerations, the difficulty
of the capital market in absorbing utility debt, the difficulty in
obtaining fuel at reasonable prices and the effect of energy
conservation. All of such issuers have been experiencing certain of these
problems in varying degrees. In addition, Federal, state and municipal
governmental authorities may from time to time review existing, and
impose additional, regulations governing the licensing, construction and
operation of nuclear power plants, which may adversely affect the ability
of the issuers of certain of the Securities in the portfolio to make
payments of principal and/or interest on such Securities.
Utilities are generally subject to extensive regulation by state
utility commissions which, for example, establish the rates which may be
charged and the appropriate rate of return on an approved asset base,
which must be approved by the state commissions. Certain utilities have
had difficulty from time to time in persuading regulators, who are
subject to political pressures, to grant rate increases necessary to
maintain an adequate return on investment and voters in many states have
the ability to impose limits on rate adjustments (for example, by
initiative or referendum). Any unexpected limitations could negatively
affect the profitability of utilities whose budgets are planned far in
advance. In addition, gas pipeline and distribution companies have had
difficulties in adjusting to short and surplus energy supplies, enforcing
or being required to comply with long-term contracts and avoiding
litigation from their customers, on the one hand, or suppliers, on the
other.
Certain of the issuers of the Securities in such a Trust may own or
operate nuclear generating facilities. Governmental authorities may from
time to time review existing, and impose additional, requirements
governing the licensing, construction and operation of nuclear power
plants. Nuclear generating projects in the electric utility industry have
experienced substantial cost increases, construction delays and licensing
difficulties. These have been caused by various factors, including
inflation, high financing costs, required design changes and rework,
allegedly faulty construction, objections by groups and governmental
officials, limits on the ability to finance, reduced forecasts of energy
requirements and economic conditions. This experience indicates that the
risk of significant cost increases, delays and licensing difficulties
remains present through to completion and achievement of commercial
operation of any nuclear project. Also, nuclear generating units in
service have experienced unplanned outages or extensions of scheduled
outages due to equipment problems or new regulatory requirements
sometimes followed by a significant delay in obtaining regulatory
approval to return to service. A major accident at a nuclear plant
anywhere, such as the accident at a nuclear plant in Chernobyl, could
cause the imposition of limits or prohibitions on the operation,
construction or licensing of nuclear units in the United States.
Other general problems of the gas, water, telephone and electric
utility industry (including state and local joint action power agencies)
include difficulty in obtaining timely and adequate rate increases,
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difficulty in financing large construction programs to provide new or
replacement facilities during an inflationary period, rising costs of
rail transportation to transport fossil fuels, the uncertainty of
transmission service costs for both interstate and intrastate
transactions, changes in tax laws which adversely affect a utility's
ability to operate profitably, increased competition in service costs,
recent reductions in estimates of future demand for electricity and gas
in certain areas of the country, restrictions on operations and increased
cost and delays attributable to environmental considerations, uncertain
availability and increased cost of capital, unavailability of fuel for
electric generation at reasonable prices, including the steady rise in
fuel costs and the costs associated with conversion to alternate fuel
sources such as coal, availability and cost of natural gas for resale,
technical and cost factors and other problems associated with
construction, licensing, regulation and operation of nuclear facilities
for electric generation, including among other considerations the
problems associated with the use of radioactive materials and the
disposal of radioactive wastes, and the effects of energy conservation.
Each of the problems referred to could adversely affect the ability of
the issuers of any utility bonds in the Trust to make payments due on
these bonds.
In view of the uncertainties discussed above, there can be no
assurance that any company's share of the full cost of nuclear units
under construction ultimately will be recovered in rates or of the extent
to which a company could earn an adequate return on its investment in
such units. The likelihood of a significantly adverse event occurring in
any of the areas of concern described above varies, as does the potential
severity of any adverse impact. It should be recognized, however, that
one or more of such adverse events could occur and individually or
collectively could have a material adverse impact on the financial
condition or the results of operations of a company's ability to make
interest and principal payments on its outstanding debt.
Certain Trusts may include Securities which are issued by companies
whose revenues are primarily derived from the sale of electric energy.
The problems faced by such issuers include the difficulty in obtaining
approval for timely and adequate rate increases from the applicable
public utility commissions, the difficulty of financing large
construction programs, increased competition, reductions in estimates of
future demand for electricity in certain areas of the country, the
limitations on operations and increased costs and delays attributable to
environmental considerations, the difficulty of the capital market in
absorbing utility debt, the difficulty in obtaining fuel at reasonable
prices and the effect of energy conservation. All of such issuers have
been experiencing certain of these problems in varying degrees. In
addition, Federal, state and municipal governmental authorities may from
time to time review existing, and impose additional, regulations
governing the licensing, construction and operation of nuclear power
plants, which may adversely affect the financial condition or the results
of operations of such issuers.
Certain Investment Considerations. Holders of common stock incur
more risk than holders of preferred stocks and debt obligations because
common stockholders, as owners of the entity, have generally inferior
rights to receive payments from the issuer in comparison with the rights
of creditors of, or holders of debt obligations or preferred stock issued
by the issuer. Holders of common stock of the type held by the portfolio
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have a right to receive dividends only when and if, and in the amounts,
declared by the issuer's Board of Directors and to participate in amounts
available for distribution by the issuer only after all other claims on
the issuer have been paid or provided for. By contrast, holders of
preferred stock have the right to receive dividends at a fixed rate when
and as declared by the issuer's Board of Directors, normally on a
cumulative basis, but do not participate in other amounts available for
distribution by the issuing corporation. Cumulative preferred stock
dividends must be paid before common stock dividends and any cumulative
preferred stock dividend omitted is added to future dividends payable to
the holders of cumulative preferred stock. Preferred stocks are also
entitled to rights on liquidation which are senior to those of common
stocks. Moreover, common stocks do not represent an obligation of the
issuer and therefore do not offer any assurance of income or provide the
degree of protection of capital of debt securities. Indeed, the issuance
of debt securities or even preferred stock will create prior claims for
payment of principal, interest, liquidation preferences and dividends
which could adversely affect the ability and inclination of the issuer to
declare or pay dividends on its common stock or the rights of holders of
common stock with respect to assets of the issuer upon liquidation or
bankruptcy. Further, unlike debt securities which typically have a stated
principal amount payable at maturity (whose value, however, will be
subject to market fluctuations prior thereto), common stocks have neither
a fixed principal amount nor a maturity and have values which are subject
to market fluctuations for as long as the stocks remain outstanding. The
value of the Securities in the portfolios thus may be expected to
fluctuate over the entire life of the Trust Funds to values higher or
lower than those prevailing on the date of this Part One Prospectus.
Whether or not the Securities are listed on a national security
exchange, the principal trading market for the Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading
market for the Securities may depend on whether dealers will make a
market in the Securities. There can be no assurance that a market will be
made for any of the Securities, that any market for the Securities will
be maintained or of the liquidity of the Securities in any markets made.
The investigation by the Securities and Exchange Commission of illegal
insider trading in connection with corporate takeovers, and possible
congressional inquiries and legislation relating to this investigation,
may adversely affect the ability of certain dealers to remain market
makers. In addition, each Trust Fund is restricted under the Investment
Company Act of 1940 from selling Securities to the Sponsor.
The price at which the Securities may be sold to meet redemptions
and the value of each Trust Fund will be adversely affected if trading
markets for the Securities are limited or absent.
Since certain Securities in certain Trusts consist of securities of
foreign issuers, an investment in such a Trust involves some investment
risks that are different in some respects from an investment in a trust
that invests entirely in securities of domestic issuers. Those
investment risks include future political and governmental restrictions
which might adversely affect the payment or receipt of payment of
dividends on the relevant Securities. In addition, for the foreign
issuers that are not subject to the reporting requirements of the
Securities Exchange act of 1934, there may be less publicly available
information than is available from a domestic issuer. Also, foreign
issuers are not necessarily subject to uniform accounting, auditing and
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financial reporting standards, practices and requirements comparable to
those applicable to domestic issuers. However, due to the nature of the
issuers of Securities included in certain Trusts, the Sponsor believes
that adequate information will be available to allow the Portfolio
Supervisor to provide portfolio surveillance.
The securities of certain of the foreign issuers in certain Trusts
are in ADR form. ADRs evidence American Depositary Receipts which
represent common stock deposited with a custodian in a depositary.
American Depositary Shares, and receipts therefor (ADRs), are issued by
an American bank or trust company to evidence ownership of underlying
securities issued by a foreign corporation. These instruments may not
necessarily be denominated in the same currency as the securities into
which they may be converted. For purposes of the discussion herein, the
term ADR generally includes American Depositary Shares.
ADRs may be sponsored or unsponsored. In an unsponsored facility,
the depositary initiates and arranges the facility at the request of
market makers and acts as agent for the ADR holder, while the company
itself is not involved in the transaction. In a sponsored facility, the
issuing company initiates the facility and agrees to pay certain
administrative and shareholder-related expenses. Sponsored facilities
use a single depositary and entail a contractual relationship between the
issuer, the shareholder and the depositary; unsponsored facilities
involve several depositaries with no contractual relationship to the
company. The depositary bank that issues an ADR generally charges a fee,
based on the price of the ADR, upon issuance and cancellation of the ADR.
This fee would be in addition to the brokerage commissions paid upon the
acquisition or surrender of the security. In addition, the depositary
bank incurs expenses in connection with the conversion of dividends or
other cash distributions paid in local currency into U.S. dollars and
such expenses are deducted from the amount of the dividend or
distribution paid to holders, resulting in a lower payout per underlying
shares represented by the ADR than would be the case if the underlying
share were held directly. Certain tax considerations, including tax rate
differentials and withholding requirements, arising from applications of
the tax laws of one nation to nationals of another and from certain
practices in the ADR market may also exist with respect to certain ADRs.
In varying degrees, any or all of these factors may affect the value of
the ADR compared with the value of the underlying shares in the local
market. In addition, the rights of holders of ADRs may be different than
those of holders of the underlying shapes, and the market for ADRs may be
less liquid than that for the underlying shares. ADRs are registered
securities pursuant to the Securities Act of 1933 and may be subject to
the reporting requirements of the Securities Exchange Act of 1934.
For those Securities that are ADRs, currency fluctuations will
affect the U.S. dollar equivalent of the local currency price of the
underlying domestic share and, as a result, are likely to affect the
value of the ADRs and consequently the value of the Securities. The
foreign issuers of securities that are ADRs may pay dividends in foreign
currencies which must be converted into dollars. Most foreign currencies
have fluctuated widely in value against the United States dollar for many
reasons, including supply and demand of the respective currency, the
soundness of the world economy and the strength of the respective economy
as compared to the economies of the United States and other countries.
Therefore, for any securities of issuers (whether or not they are in ADR
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form) whose earnings are stated in foreign currencies, or which pay
dividends in foreign currencies or which are traded in foreign
currencies, there is a risk that their United States dollar value will
vary with fluctuations in the United States dollar foreign exchange rates
for the relevant currencies.
On the basis of the best information available to the Sponsor at the
present time, none of the Securities are subject to exchange control
restrictions under existing law which would materially interfere with
payment to a Trust of dividends due on, or proceeds from the sale of, the
Securities.
However, there can be no assurance that exchange control regulations
might not be adopted in the future which might adversely affect payments
to a Trust. In addition, the adoption of exchange control regulations
and other legal restrictions could have an adverse impact on the
marketability of international securities in a Trust and on the ability
of a Trust to satisfy its obligation to redeem Units tendered to the
Trustee for redemption.
Litigation and Legislation. From time to time Congress considers
proposals to reduce the rate of the dividends-received deduction.
Enactment into law of a proposal to reduce the rate would adversely
affect the after-tax return to investors who can take advantage of the
deduction. Unitholders are urged to consult their own tax advisers.
Further, at any time, litigation may be initiated on a variety of
grounds, or legislation may be enacted with respect to the Securities in
a Trust Fund or the issuers of the Securities. There can be no assurance
that future litigation or legislation will not have a material adverse
effect on the Trust Funds or will not impair the ability of issuers to
achieve their business goals.
FEDERAL TAX STATUS
Federal Taxation. The following is a general discussion of certain
of the Federal income tax consequences of the purchase, ownership and
disposition of the Units. The summary is limited to investors who hold
the Units as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code of 1986,
as amended (the "Code"). Unitholders should consult their tax advisers in
determining the federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units in the Trust.
In the opinion of Chapman and Cutler, special counsel for the
Sponsor, under existing law:
1. The Trust is not an association taxable as a corporation
for federal income tax purposes; each Unitholder will be treated as
the owner of a pro rata portion of each of the assets of the Trust
under the Code; and the income of the Trust will be treated as
income of the Unitholders thereof under the Code. Each Unitholder
will be considered to have received his pro rata share of income
derived from the Trust asset when such income is considered to be
received by the Trust.
-11-
<PAGE>
2. A Unitholder will be considered to have received all of
the dividends paid on his pro rata portion of each Equity Security
when such dividends are received by a Trust. Unitholders will be
taxed in this manner regardless of whether distributions from a
Trust are actually received by the Unitholder or are automatically
reinvested (see "Unitholders-Distribution Reinvestment").
3. Each Unitholder will have a taxable event when the Trust
disposes of an Equity Security (whether by sale, exchange,
liquidation, redemption, or otherwise) or upon the sale or
redemption of Units by such Unitholder (except to the extent an in
kind distribution of stock is received by such Unitholder from the
Trust as described below). The price a Unitholder pays for his
Units, generally including sales charges, is allocated among his pro
rata portion of each Equity Security held by the Trust (in
proportion to the fair market values thereof on the valuation date
closest to the date the Unitholder purchases his Units) in order to
determine his tax basis for his pro rata portion of each Equity
Security held by the Trust. For federal income tax purposes, a
Unitholder's pro rata portion of dividends as defined by Section 316
of the Code paid with respect to an Equity Security held by the
Trust are taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits". A
Unitholder's pro rata portion of dividends paid on such Equity
Security which exceeds such current and accumulated earnings and
profits will first reduce a Unitholder's tax basis in such Equity
Security, and to the extent that such dividends exceed a
Unitholder's tax basis in such Equity Security shall generally be
treated as capital gain. In general, any such capital gain will be
short-term unless a Unitholder has held his Units for more than one
year.
4. A Unitholder's portion of gain, if any, upon the sale or
redemption of Units or the disposition of Equity Securities held by
the Trust will generally be considered a capital gain (except in the
case of a dealer or a financial institution) and, in general, will
be long-term if the Unitholder has held his Units for more than one
year (the date on which the Units are acquired (i.e., the "trade
date") is excluded for purposes of determining whether the Units
have been held for more than one year). A Unitholder's portion of
loss, if any, upon the sale or redemption of Units or the
disposition of Equity Securities held by the Trust will generally be
considered a capital loss (except in the case of a dealer or a
financial institution) and, in general, will be long-term if the
Unitholder has held his Units for more than one year. Unitholders
should consult their tax advisers regarding the recognition of such
capital gains and losses for federal income tax purposes.
Dividends Received Deduction. A corporation that owns Units will
generally be entitled to a 70% dividends received deduction with respect
to such Unitholder's pro rata portion of dividends received by the Trust
(to the extent such dividends are taxable as ordinary income, as
discussed above, and are attributable to domestic corporations) in the
same manner as if such corporation directly owned the Equity Securities
paying such dividends (other than corporate Unitholders, such as "S"
corporations, which are not eligible for the deduction because of their
special characteristics and other than for purposes of special taxes such
as the accumulated earnings tax and the personal holding corporation
-12-
<PAGE>
tax). However, a corporation owning Units should be aware that
Sections 246 and 246A of the Code impose additional limitations on the
eligibility of dividends for the 70% dividends received deduction. These
limitations include a requirement that stock (and therefore Units) must
generally be held at least 46 days (as determined under Section 246(c) of
the Code). Final regulations have been recently issued which address
special rules that must be considered in determining whether the 46-day
holding requirement is met. Moreover, the allowable percentage of the
deduction will be reduced from 70% if a corporate Unitholder owns certain
stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation. It should be noted that
various legislative proposals that would affect the dividends received
deduction have been introduced. Unitholders should consult with their
tax advisers with respect to the limitations on and possible
modifications to the dividends received deduction.
To the extent dividends received by the Trust are attributable to
foreign corporations, a corporation that owns Units will not be entitled
to the dividends received deduction with respect to its pro rata portion
of such dividends, since the dividends received deduction is generally
available only with respect to dividends paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is
deductible by the Unitholder to the same extent as though the expense had
been paid directly by him. It should be noted that as a result of the
Tax Reform Act of 1986, certain miscellaneous itemized deductions, such
as investment expenses, tax return preparation fees and employee business
expenses will be deductible by an individual only to the extent they
exceed 2% of such individual's adjusted gross income. Unitholders may be
required to treat some or all of the expenses of the Trust as
miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Equity
Securities by the Trust or Disposition of Units. As discussed above, a
Unitholder may recognize taxable gain (or loss) when an Equity Security
is disposed of by the Trust or if the Unitholder disposes of a Unit. For
taxpayers other than corporations, net capital gains (which is defined as
net long-term capital gain over net short-term capital loss for a taxable
year) are subject to a maximum marginal stated tax rate of 28%. However,
it should be noted that legislative proposals are introduced from time to
time that affect tax rates and could affect relative differences at which
ordinary income and capital gains are taxed.
The Revenue Reconciliation Act of 1993 (the "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 Act, the
Act includes a provision that recharacterizes capital gains as ordinary
income in the case of certain financial transactions that are "conversion
transactions" effective for transactions entered into after April 30,
1993. Unitholders and prospective investors should consult with their
tax advisers regarding the potential effect of this provision on their
investment in Units. If a Unitholder disposes of a Unit he is deemed
thereby to have disposed of his entire pro rata interest in all assets of
the Trust involved including his pro rata portion of all the Equity
Securities represented by the Unit.
-13-
<PAGE>
Special Tax Consequences of In Kind Distributions Upon Redemption of
Units or Termination of the Trust. As discussed in "Rights of
Unitholders-Redemption of Units", under certain circumstances a
Unitholder tendering Units for redemption may request an In Kind
Distribution. A Unitholder may also under certain circumstances request
an In Kind Distribution upon the termination of the Trust. See "Rights
of Unitholders-Redemption of Units." As previously discussed, prior to
the redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust assets for
federal income tax purposes. The receipt of an In Kind Distribution will
result in a Unitholder receiving an undivided interest in whole shares of
stock plus, possibly, cash.
The potential tax consequences that may occur under an In Kind
Distribution will depend on whether or not a Unitholder receives cash in
addition to Equity Securities. An "Equity Security" for this purpose is
a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
Equity Securities in exchange for his or her pro rata portion in the
Equity Securities held by the Trust. However, if a Unitholder also
receives cash in exchange for a fractional share of an Equity Security
held by the Trust, such Unitholder will generally recognize gain or loss
based upon the difference between the amount of cash received by the
Unitholder and his tax basis in such fractional share of an Equity
Securities held by the Trust.
Because the Trust will own many Equity Securities, a Unitholder who
requests an In Kind Distribution will have to analyze the tax
consequences with respect to each Equity Security owned by the Trust.
The amount of taxable gain (or loss) recognized upon such exchange will
generally equal the sum of the gain (or loss) recognized under the rules
described above by such Unitholder with respect to each Equity Security
owned by the Trust. Unitholders who request an In Kind Distribution are
advised to consult their tax advisers in this regard.
Computation of the Unitholder's Tax Basis. Initially, a
Unitholder's tax basis in his Units will generally equal the price paid
by such Unitholder for his Units. The cost of the Units is allocated
among the Equity Securities held in the Trust in accordance with the
proportion of the fair market values of such Equity Securities on the
valuation date nearest the date the Units are purchased in order to
determine such Unitholder's tax basis for his pro rata portion of each
Equity Security.
A Unitholder's tax basis in his Units and his pro rata portion of an
Equity Security held by the Trust will be reduced to the extent dividends
paid with respect to such Equity Security are received by the Trust which
are not taxable as ordinary income as described above.
General. Each Unitholder will be requested to provide the
Unitholder's taxpayer identification number to the Trustee and to certify
that the Unitholder has not been notified that payments to the Unitholder
are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by the Trust to such Unitholder (including
amounts received upon the redemption of Units) will be subject to back-up
withholding. Distributions by the Trust (other than those that are not
-14-
<PAGE>
treated as United States source income, if any) will generally be subject
to United States income taxation and withholding in the case of Units
held by non-resident alien individuals, foreign corporations or other non-
United States persons. Such persons should consult their tax advisers.
In general, income that is not effectively connected to the conduct
of a trade or business within the United States that is earned by non-
U.S. Unitholders and derived from dividends of foreign corporations will
not be subject to U.S. withholding tax provided that less than 25 percent
of the gross income of the foreign corporation for a three-year period
ending with the close of its taxable year preceding payment was not
effectively connected to the conduct of a trade and business within the
United States. In addition, such earnings may be exempt from U.S.
withholding pursuant to a specific treaty between the United States and a
foreign country. Non-U.S. Unitholders should consult their own tax
advisers regarding the imposition of U.S. withholding on distributions
from the Trust.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject
to foreign withholding taxes and Unitholders should consult their tax
advisers regarding the potential tax consequences relating to the payment
of any such withholding taxes by the Trust. Any dividends withheld as a
result thereof will nevertheless be treated as income to the Unitholders.
Because, under the grantor trust rules, an investor is deemed to have
paid directly his share of foreign taxes that have been paid or accrued,
if any, an investor may be entitled to a foreign tax credit or deduction
for United States tax purposes with respect to such taxes. Investors
should consult their tax advisers with respect to foreign withholding
taxes and foreign tax credits.
Unitholders will be notified annually of the amount of income
dividends includable in the Unitholder's gross income and amounts of
Trust expenses which may be claimed as itemized deductions.
Unitholders desiring to purchase Units for tax-deferred plans and
IRAs should consult their broker-dealers for details on establishing such
accounts. Units may also be purchased by persons who already have self-
directed plans established.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("U.S. Unitholders") with regard to federal income taxes.
Unitholders may be subject to taxation in other jurisdictions and should
consult their own tax advisers in this regard. As used herein, the term
"U.S. Unitholder" means an owner of a Unit in one of the Trusts that (a)
is (i) for United States federal income tax purposes a citizen or
resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the
income of which is subject to United States federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unitholder in
paragraph (a) but whose income from a Unit is effectively connected with
such Unitholder's conduct of a United States trade or business. The term
also includes certain former citizens of the United States whose income
and gain on the Units will be taxable.
-15-
<PAGE>
PUBLIC OFFERING OF UNITS
Public Offering Price. During the secondary market, Units are
offered at the Public Offering Price (which is based on the aggregate
underlying bid value of the Securities in the Trust Fund and includes a
sales charge set forth in the table below) plus a pro rata share of any
accumulated dividends. Such underlying value shall also include the
proportionate share of any undistributed cash held in the Capital Account
of the Trust involved. The sales charge per Unit will be computed as
follows:
<TABLE>
<CAPTION>
REMAINING TERM PERCENT OF PERCENT OF NET
OF TRUST OFFERING PRICE AMOUNT INVESTED
-------------- -------------- ---------------
<S> <C> <C>
2 or more years 4.00% 4.167%
Less than 2 years 3.00 3.093
</TABLE>
The sales charge per Unit of a Trust Fund in the secondary market
will be reduced pursuant to the following graduated scale:
<TABLE>
<CAPTION>
REMAINING TERM OF TRUST
--------------------------------------
LESS THAN TWO MORE THAN TWO
YEARS YEARS
------------------ ------------------
PERCENT PERCENT PERCENT PERCENT
OF OF NET OF OF NET
OFFERING AMOUNT OFFERING AMOUNT
NUMBER OF UNITS* PRICE INVESTED PRICE INVESTED
- ---------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Less than 10,000 3.00% 3.093% 4.00% 4.167%
10,000 but less than 25,000 2.75 2.828 3.50 3.627
25,000 but less than 50,000 2.25 2.302 3.00 3.093
50,000 but less than 75,000 2.00 2.041 2.50 2.564
75,000 or more 1.75 1.781 2.25 2.302
</TABLE>
- --------------------
* The breakpoint sales charges are also applied on a dollar basis
utilizing a breakpoint equivalent in the above table of $10 per Unit
and will be applied on whichever basis is more favorable to the
investor.
The reduced sales charges as shown on the table above will apply to
all purchases of Units on any one day by the same purchaser from the same
dealer and for this purpose purchases of Units of a Trust Fund will be
aggregated with concurrent purchases of units of any other unit
investment trust that may be offered by the Sponsor. Additionally, Units
purchased in the name of a spouse or child (under 21) of such purchaser
will be deemed to be additional purchases by such purchaser. The reduced
sales charges will also be applicable to a trust or other fiduciary
purchasing for a single trust estate or single fiduciary account.
-16-
<PAGE>
The Sponsor intends to permit officers, directors and employees of
the Sponsor and its affiliates and, in the discretion of the Sponsor,
registered representatives of selling firms to purchase Units of the
Trust Funds without a sales charge, although a transaction processing fee
may be imposed on such trades.
Units may be purchased at the Public Offering Price less the
concession the Sponsor typically allows to dealers and other selling
agents for purchases (see "Public Distribution of Units") by investors
who purchase Units through registered investment advisers, certified
financial planners or registered broker-dealers who in each case either
charge periodic fees for financial planning, investment advisory or asset
management services, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap
fee" charge is imposed.
During the secondary market, the Evaluator will appraise or cause to
be appraised daily the value of the underlying Securities as of 3:15 P.M.
Central time on days the New York Stock Exchange is open and will adjust
the Public Offering Price of the Units commensurate with such valuation.
The Public Offering Price will be effective for all orders received at or
prior to the close of trading on the New York Stock Exchange on each such
day. Orders received by the Trustee, Sponsor or any dealer for purchases,
sales or redemptions after that time, or on a day when the New York Stock
Exchange is closed, will be held until the next determination of price.
The value of the Securities is determined on each business day by
the Evaluator based on the last bid prices during the secondary market
and for redemptions on the day the valuation is made for Securities
listed on a national stock exchange or, if not so listed, on the last
offer (or bid as the case may be) prices on the over-the-counter market
or by taking into account the same factors referred to under
"Redemption-Computation of Redemption Price."
The minimum purchase in the secondary market is 100 Units of a
particular Trust Fund.
Public Distribution of Units. During the secondary offering period,
Units of each Trust Fund will be distributed to the public at the Public
Offering Price determined in the manner provided above.
The Sponsor has qualified Units of each Trust Fund for sale in a
number of states. Units will be sold through dealers who are members of
the National Association of Securities Dealers, Inc. and through others.
Sales may be made to or through dealers at prices which represent
discounts from the Public Offering Price as set forth below. Certain
commercial banks are making Units of the Trust Funds available to their
customers on an agency basis. A portion of the sales charge paid by their
customers is retained by or remitted to the banks in the amounts shown in
the table below. Under the Glass-Steagall Act, banks are prohibited from
underwriting Trust Fund Units; however, the Glass-Steagall Act does
permit certain agency transactions and the banking regulators have
indicated that these particular agency transactions are permitted under
such Act. In addition, state securities laws on this issue may differ
-17-
<PAGE>
from the interpretations of Federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to
state law. The Sponsor reserves the right to change the discounts set
forth below from time to time.
In addition to such discounts, the Sponsor may, from time to time,
pay or allow an additional discount, in the form of cash or other
compensation, to dealers employing registered representatives who sell,
during a specified time period, a minimum dollar amount of Units of a
Trust and other unit investment trusts underwritten by the Sponsor. At
various times the Sponsor may implement programs under which the sales
force of a broker or dealer may be eligible to win nominal awards for
certain sales efforts, or under which the Sponsor will reallow to any
such broker or dealer that sponsors sales contests or recognition
programs conforming to criteria established by the Sponsor, or
participates in sales programs sponsored by the Sponsor, an amount not
exceeding the total applicable sales charges on the sales generated by
such person at the public offering price during such programs. Also, the
Sponsor in its discretion may from time to time pursuant to objective
criteria established by the Sponsor pay fees to qualifying brokers or
dealers for certain services or activities which are primarily intended
to result in sales of Units of the Trust Funds. Such payments are made by
the Sponsor out of its own assets, and not out of the assets of the Trust
Funds. These programs will not change the price Unitholders pay for their
Units or the amount that a Trust Fund will receive from the Units sold.
The difference between the discount and the sales charge will be retained
by the Sponsor.
<TABLE>
<CAPTION>
REGULAR CONCESSION OR AGENCY
COMMISSION
----------------------------------
LESS THAN TWO TWO OR MORE
NUMBER OF UNITS* YEARS YEARS
- ---------------- -------------- --------------
<S> <C> <C>
Less than 10,000 1.75 2.75%
10,000 but less than 25,000 1.50 2.25
25,000 but less than 50,000 1.25 2.00
50,000 but less than 75,000 1.00 1.50
75,000 or more 1.00 1.25
</TABLE>
- ---------------------
* The breakpoint discounts are also applied on a dollar basis
utilizing a breakpoint equivalent in the above table of $10 per
Unit.
The Sponsor reserves the right to reject, in whole or in part, any
order for the purchase of Units.
Sponsor Profits. The Sponsor will receive gross sales charges equal
to the percentage of the Public Offering Price of the Units of a Trust
Fund as stated under "Public Offering Price."
-18-
<PAGE>
MARKET FOR UNITS
While not obligated to do so, the Sponsor intends to, subject to
change at any time, maintain a market for Units of the Trust Funds
offered hereby and to continuously offer to purchase said Units at
prices, determined by the Evaluator, based on the bid value of the
underlying Securities. The aggregate bid prices of the underlying
Securities are expected to be less than the related aggregate offering
prices (which is the evaluation method used during the initial public
offering period). Accordingly, Unitholders who wish to dispose of their
Units should inquire of their bank or broker as to current market prices
in order to determine whether there is in existence any price in excess
of the Redemption Price and, if so, the amount thereof. The offering
price of any Units resold by the Sponsor will be in accord with that
described in the currently effective prospectus describing such Units.
Any profit or loss resulting from the resale of such Units will belong to
the Sponsor. The Sponsor may suspend or discontinue purchases of Units
of the Trust Funds if the supply of Units exceeds demand, or for other
business reasons.
REDEMPTION
General. A Unitholder who does not dispose of Units in the
secondary market described above may cause Units to be redeemed by the
Trustee by making a written request to the Trustee and, in the case of
Units evidenced by a certificate, by tendering such certificate to the
Trustee, properly endorsed or accompanied by a written instrument or
instruments of transfer in form satisfactory to the Trustee. Unitholders
must sign the request, and such certificate or transfer instrument,
exactly as their names appear on the records of the Trustee and on any
certificate representing the Units to be redeemed. If the amount of the
redemption is $25,000 or less and the proceeds are payable to the
Unitholder(s) of record at the address of record, no signature guarantee
is necessary for redemptions by individual account owners (including
joint owners). Additional documentation may be requested, and a
signature guarantee is always required, from corporations, executors,
administrators, trustees, guardians or associations. The signatures must
be guaranteed as provided under "Unitholders-Ownership of Units." A
certificate should only be sent by registered or certified mail for the
protection of the Unitholder. Since tender of the certificate is required
for redemption when one has been issued, Units represented by a
certificate cannot be redeemed until the certificate representing such
Units has been received by the purchasers.
Redemption shall be made by the Trustee on the third business day
following the day on which a tender for redemption is received (the
"Redemption Date") by payment of cash equivalent to the Redemption Price
for the Trust Fund involved, determined as set forth below under
"Computation of Redemption Price," as of the evaluation time stated under
"Essential Information," next following such tender, multiplied by the
number of Units being redeemed. Any Units redeemed shall be cancelled and
any undivided fractional interest in such Trust Fund extinguished. The
price received upon redemption might be more or less than the amount paid
by the Unitholder depending on the value of the Securities in a Trust
Fund at the time of redemption.
-19-
<PAGE>
Under regulations issued by the Internal Revenue Service, the
Trustee is required to withhold a specified percentage of the principal
amount of a Unit redemption if the Trustee has not been furnished the
redeeming Unitholder's tax identification number in the manner required
by such regulations. Any amount so withheld is transmitted to the
Internal Revenue Service and may be recovered by the Unitholder only when
filing a tax return. Under normal circumstances the Trustee obtains the
Unitholder's tax identification number from the selling broker. However,
any time a Unitholder elects to tender Units for redemption, such
Unitholder should make sure that the Trustee has been provided a
certified tax identification number in order to avoid this possible "back-
up withholding." In the event the Trustee has not been previously
provided such number, one must be provided at the time redemption is
requested.
Any amounts paid on redemption representing unpaid dividends shall
be withdrawn from the Income Account of the Trust Fund involved to the
extent that funds are available for such purpose. All other amounts paid
on redemption shall be withdrawn from the Capital Account for such Trust
Fund. The Trustee is empowered to sell Securities for a Trust Fund in
order to make funds available for the redemption of Units of such Trust
Fund. Such sale may be required when Securities would not otherwise be
sold and might result in lower prices than might otherwise be realized.
To the extent Securities are sold, the size and diversity of the affected
Trust Fund will be reduced.
The Trustee is irrevocably authorized in its discretion, if an
Underwriter does not elect to purchase any Unit tendered for redemption,
in lieu of redeeming such Units, to sell such Units in the over-the-
counter market for the account of tendering Unitholders at prices which
will return to the Unitholders amounts in cash, net after brokerage
commissions, transfer taxes and other charges, equal to or in excess of
the Redemption Price for such Units. In the event of any such sale, the
Trustee shall pay the net proceeds thereof to the Unitholders on the day
they would otherwise be entitled to receive payment of the Redemption
Price.
Unitholders tendering Units for redemption may request a
distribution in kind (a "Distribution In Kind") from the Trustee in lieu
of cash redemption. A Unitholder may request a Distribution In Kind of
an amount and value of Securities per Unit equal to the Redemption Price
per Unit as determined as of the evaluation time next following the
tender, provided that the tendering Unitholder is entitled to receive at
least $50,000 ($25,000 for certain Trusts) of proceeds as part of his or
her distribution and the Unitholder has elected to redeem prior to the
date specified in Part Two for each Trust. If the Unitholder meets these
requirements, a Distribution In Kind will be made by the Trustee through
the distribution of each of the Securities of the Trust involved in book
entry form to the account of the Unitholder's bank or broker-dealer at
Depository Trust Company. The tendering Unitholder shall be entitled to
receive whole shares of each of the Securities comprising the portfolio
of the Trust involved and cash from the Capital Account equal to the
fractional shares to which the tendering Unitholder is entitled. The
Trustee shall make any adjustments necessary to reflect differences
between the Redemption Price of the Units and the value of the Securities
distributed in kind as of the date of tender. If funds in the Capital
Account are insufficient to cover the required cash distribution to the
-20-
<PAGE>
tendering Unitholder, the Trustee may sell Securities. The in kind
redemption option may be terminated by the Sponsor on a date other than
that specified under "Redemption in Kind" upon notice to the Unitholders
prior to the specified date.
To the extent that Securities are redeemed in kind or sold, the size
and diversity of the affected Trust Fund will be reduced but each
remaining Unit will continue to represent approximately the same
proportional interest in each Security. Sales may be required at a time
when Securities would not otherwise be sold and may result in lower
prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the portfolio at the time of
redemption. Special Federal income tax consequences will result if a
Unitholder requests a Distribution In Kind (see "Federal Tax Status").
The right of redemption may be suspended and payment postponed (1)
for any period during which the New York Stock Exchange is closed, other
than customary weekend and holiday closings, or during which (as
determined by the Securities and Exchange Commission) trading on the New
York Stock Exchange is restricted; (2) for any period during which an
emergency exists as a result of which disposal by the Trustee of
Securities is not reasonably practicable or it is not reasonably
practicable to fairly determine the value of the underlying Securities in
accordance with each Trust Agreement; or (3) for such other period as the
Securities and Exchange Commission may by order permit. The Trustee is
not liable to any person in any way for any loss or damage which may
result from any such suspension or postponement.
Computation of Redemption Price. The Redemption Price per Unit (as
well as the secondary market Public Offering Price) will be determined on
the basis of the aggregate underlying bid value of the Securities in the
Trust Fund involved. On the Initial Date of Deposit, the Public Offering
Price per Unit (which is based on the underlying offering prices of the
Securities and includes the sales charge) exceeded the value at which
Units could have been redeemed by the amount shown under "Essential
Information." While the Trustee has the power to determine the Redemption
Price per Unit when Units are tendered for redemption, such authority has
been delegated to the Evaluator which determines the price per Unit on a
daily basis. The Redemption Price per Unit is the pro rata share of each
Unit in a Trust Fund determined on the basis of (i) the cash on hand in
such Trust Fund or monies in the process of being collected and (ii) the
value of the Securities in the Trust Fund less (a) amounts representing
taxes or other governmental charges payable out of the Trust, (b) any
amount owing to the Trustee for its advances and (c) the accrued expenses
of such Trust. The Evaluator may determine the value of the Securities in
a Trust Fund in the following manner: if the Security is listed on a
national securities exchange, the evaluation will generally be based on
the last bid price on the exchange (unless the Evaluator deems the price
inappropriate as a basis for evaluation). If the Security is not so
listed or, if so listed and the principal market for the Security is
other than on the exchange, the evaluation will generally be made by the
Evaluator in good faith based on the last bid price on the over-the-
counter market (unless the Evaluator deems such price inappropriate as a
basis for evaluation) or, if a bid price is not available, (1) on the
basis of the current bid price for comparable securities, (2) by the
Evaluator's appraising the value of the Securities in good faith at the
-21-
<PAGE>
bid side of the market or (3) by any combination thereof. See "Public
Offering of Units-Public Offering Price."
RETIREMENT PLANS
Each Trust Fund may be well suited for purchase by Individual
Retirement Accounts, Keogh Plans, pension funds and other qualified
retirement plans, certain of which are briefly described below.
Generally, capital gains and income received under each of the
foregoing plans are deferred from Federal taxation. All distributions
from such plans are generally treated as ordinary income but may, in some
cases, be eligible for special income averaging or tax-deferred rollover
treatment. Investors considering participation in any such plan should
review specific tax laws related thereto and should consult their
attorneys or tax advisers with respect to the establishment and
maintenance of any such plan. Such plans are offered by brokerage firms
and other financial institutions. Each Trust will waive the $1,000
minimum investment requirement for IRA accounts. The minimum investment
is $250 for tax-defined plans such as IRA accounts. Fees and charges with
respect to such plans may vary.
Individual Retirement Account-IRA. Any individual under age 70-1/2
may contribute the lesser of $2,000 or 100% of compensation to an IRA
annually. Such contributions are fully deductible if the individual (and
spouse if filing jointly) are not covered by a retirement plan at work.
The deductible amount an individual may contribute to an IRA will be
reduced $10 for each $50 of adjusted gross income over $25,000 ($40,000
if married, filing jointly or $0 if married, filing separately), if
either an individual or their spouse (if married, filing jointly) is an
active participant in an employer maintained retirement plan. Thus, if an
individual has adjusted gross income over $35,000 ($50,000 if married,
filing jointly or $0 if married, filing separately) and if an individual
or their spouse is an active participant in an employer maintained
retirement plan, no IRA deduction is permitted. Under the Code, an
individual may make nondeductible contributions to the extent deductible
contributions are not allowed. All distributions from an IRA (other than
the return of certain excess contributions) are treated as ordinary
income for Federal income taxation purposes provided that under the Code
an individual need not pay tax on the return of nondeductible
contributions, the amount includable in income for the taxable year is
the portion of the amount withdrawn for the taxable year as the
individual's aggregate nondeductible IRA contributions bear to the
aggregate balance of all IRAs of the individual.
A participant's interest in an IRA must be, or commence to be,
distributed to the participant not later than April 1 of the calendar
year following the year during which the participant attains age 70-1/2.
Distributions made before attainment of age 59-1/2, except in the case of
the participant's death or disability, or where the amount distributed is
to be rolled over to another IRA, or where the distributions are taken as
a series of substantially equal periodic payments over the participant's
life or life expectancy (or the joint lives or life expectancies of the
participant and the designated beneficiary) are generally subject to a
surtax in an amount equal to 10% of the distribution. The amount of such
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periodic payments may not be modified before the later of five years or
attainment of age 59-1/2. Excess contributions are subject to an annual
6% excise tax.
IRA applications, disclosure statements and trust agreements are
available from the Sponsor upon request.
Qualified Retirement Plans. Units of each Trust may be purchased by
qualified pension or profit sharing plans maintained by corporations,
partnerships or sole proprietors. The maximum annual contribution for a
participant in a money purchase pension plan or to paired profit sharing
and pension plans is the lesser of 25% of compensation or $30,000.
Prototype plan documents for establishing qualified retirement plans are
available from the Sponsor upon request.
Excess Distributions Tax. In addition to the other taxes due by
reason of a plan distribution, a tax of 15% may apply to certain
aggregate distributions from IRAs, Keogh plans, and corporate retirement
plans to the extent such aggregate taxable distributions exceed specified
amounts (generally $150,000, as adjusted) during a tax year. This 15% tax
will not apply to distributions on account of death, qualified domestic
relations orders or amounts rolled over to an eligible plan. In general,
for lump sum distributions the excess distribution over $750,000 (as
adjusted) will be subject to the 15% tax.
The Trustee has agreed to act as custodian for certain retirement
plan accounts. An annual fee per account, if not paid separately, will be
assessed by the Trustee and paid through the liquidation of shares of the
reinvestment account. An individual wishing the Trustee to act as
custodian must complete a Ranson UIT/IRA application and forward it along
with a check made payable to the Trustee. Certificates for Individual
Retirement Accounts can not be issued.
UNITHOLDERS
Ownership of Units. Ownership of Units of a Trust Fund will not be
evidenced by certificates unless a Unitholder, the Unitholder's
registered broker/dealer or the clearing agent for such broker/dealer
makes a written request to the Trustee. Units are transferable by making
a written request to the Trustee and, in the case of Units evidenced by a
certificate, by presenting and surrendering such certificate to the
Trustee properly endorsed or accompanied by a written instrument or
instruments of transfer which should be sent by registered or certified
mail for the protection of the Unitholder. Unitholders must sign such
written request, and such certificate or transfer instrument, exactly as
their names appear on the records of the Trustee and on any certificate
representing the Units to be transferred. Such signatures must be
guaranteed by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or with such other signature program in addition to, or
in substitution for, STAMP, as may be accepted by the Trustee.
Units may be purchased and certificates, if requested, will be
issued in denominations of one Unit or any multiple thereof, subject to
each Trust's minimum investment requirement of 100 Units or $1,000.
Fractions of Units, if any, will be computed to three decimal places. Any
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certificate issued will be numbered serially for identification, issued
in fully registered form and will be transferable only on the books of
the Trustee. The Trustee may require a Unitholder to pay a reasonable
fee, to be determined in the sole discretion of the Trustee, for each
certificate re-issued or transferred and to pay any governmental charge
that may be imposed in connection with each such transfer or interchange.
The Trustee at the present time does not intend to charge for the normal
transfer or interchange of certificates. Destroyed, stolen, mutilated or
lost certificates will be replaced upon delivery to the Trustee of
satisfactory indemnity (generally amounting to 3% of the market value of
the Units), affidavit of loss, evidence of ownership and payment of
expenses incurred.
Distributions to Unitholders. Income received by a Trust is
credited by the Trustee to the Income Account of such Trust. Other
receipts are credited to the Capital Account of such Trust. Income
received by a Trust will be distributed on or shortly after the date set
forth in Part Two for each Trust on a pro rata basis to Unitholders of
record as of the preceding record date (which will be the first day of
the related month). All distributions will be net of applicable expenses.
There is no assurance that any actual distributions will be made since
all dividends received may be used to pay expenses. In addition, amounts
from the Capital Account of such Trust, if any, will be distributed at
least annually in December to the Unitholders then of record. Proceeds
received from the disposition of any of the Securities after a record
date and prior to the following distribution date will be held in the
Capital Account and not distributed until the next distribution date
applicable to such Capital Account. The Trustee shall not be required to
make a distribution from the Capital Account unless the cash balance on
deposit therein available for distribution shall be sufficient to
distribute at least $1.00 per Unit. The Trustee is not required to pay
interest on funds held in the Capital or Income Accounts (but may itself
earn interest thereon and therefore benefits from the use of such funds).
The Trustee is authorized to reinvest any funds held in the Capital or
Income Accounts, pending distribution, in U.S. Treasury obligations which
mature on or before the next applicable distribution date. Any
obligations so acquired must be held until they mature and proceeds
therefrom may not be reinvested.
The distribution to the Unitholders as of each record date will be
made on the following distribution date or shortly thereafter and shall
consist of an amount substantially equal to such portion of the
Unitholders' pro rata share of the dividend distributions then held in
the Income Account after deducting estimated expenses. Because dividends
are not received by a Trust at a constant rate throughout the year, such
distributions to Unitholders are expected to fluctuate. Persons who
purchase Units will commence receiving distributions only after such
person becomes a record owner. Notification to the Trustee of the
transfer of Units is the responsibility of the purchaser, but in the
normal course of business such notice is provided by the selling broker-
dealer.
As of the first day of each month, the Trustee will deduct from the
Income Account of a Trust and, to the extent funds are not sufficient
therein, from the Capital Account of such Trust amounts necessary to pay
the expenses of the Trust (as determined on the basis set forth under
"Trust Operating Expenses"). The Trustee also may withdraw from said
accounts such amounts, if any, as it deems necessary to establish a
reserve for any governmental charges payable out of such Trust. Amounts
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so withdrawn shall not be considered a part of the Trust's assets until
such time as the Trustee shall return all or any part of such amounts to
the appropriate accounts. In addition, the Trustee may withdraw from the
Income and Capital Accounts of such Trust such amounts as may be
necessary to cover redemptions of Units.
Distribution Reinvestment. Zurich Kemper Investments, Inc. is the
investment manager and principal underwriter of several front-end load
mutual funds. Each Unitholder of a Trust Fund may elect to have
distributions of capital (including capital gains, if any) or dividends
or both automatically invested without charge in shares of any one of
these funds which are registered in such Unitholder's state of residence,
other than those Zurich Kemper-advised mutual funds sold with a
contingent deferred sales charge. Since the portfolio securities and
investment objectives of such Zurich Kemper-advised mutual funds may
differ significantly from that of the Trust Funds, Unitholders should
carefully consider the consequences before selecting such mutual funds
for reinvestment. Detailed information with respect to the investment
objectives and the management of such mutual funds is contained in their
respective prospectuses, which can be obtained from the Sponsor upon
request. An investor should read the prospectus of the reinvestment fund
selected prior to making the election to reinvest. Unitholders who desire
to have such distributions automatically reinvested should inform their
broker at the time of purchase or should file with the Program Agent
referred to below a written notice of election.
Unitholders who are receiving distributions in cash may elect to
participate in distribution reinvestment by filing with the Program Agent
an election to have such distributions reinvested without charge. Such
election must be received by the Program Agent at least ten days prior to
the Record Date applicable to any distribution in order to be in effect
for such Record Date. Any such election shall remain in effect until a
subsequent notice is received by the Program Agent. See
"Unitholders-Distributions to Unitholders."
The Program Agent is the Trustee. All inquiries concerning
participation in distribution reinvestment should be directed to the
Program Agent at its unit investment trust office.
Statements to Unitholders. With each distribution, the Trustee will
furnish or cause to be furnished to each Unitholder a statement of the
amount of income and the amount of other receipts, if any, which are
being distributed, expressed in each case as a dollar amount per Unit.
The accounts of each Trust Fund are required to be audited annually,
at such Trust Fund's expense, by independent public accountants
designated by such Sponsor, unless the Trustee determines that such an
audit would not be in the best interest of the Unitholders of such Trust
Fund. The accountants' report will be furnished by the Trustee to any
Unitholder of a Trust Fund upon written request. Within a reasonable
period of time after the end of each calendar year, the Trustee shall
furnish to each person who at any time during the calendar year was a
Unitholder of a Trust Fund a statement, covering the calendar year,
setting forth for such Trust Fund:
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A. As to the Income Account:
1. Income received;
2. Deductions for applicable taxes and for fees and
expenses of the Trust and for redemptions of Units, if any; and
3. The balance remaining after such distributions and
deductions, expressed in each case both as a total dollar
amount and as a dollar amount representing the pro rata share
of each Unit outstanding on the last business day of such
calendar year; and
B. As to the Capital Account:
1. The dates of disposition of any Securities (other
than pursuant to Distribution In Kind) and the net proceeds
received therefrom;
2. The results of Distributions In Kind in connection
with redemptions of Units, if any;
3. Deductions for payment of applicable taxes and fees
and expenses of the Trust held for distribution to Unitholders
of record as of a date prior to the determination; and
4. The balance remaining after such distributions and
deductions expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit
outstanding on the last business day of such calendar year; and
C. The following information:
1. A list of the Securities as of the last business day
of such calendar year;
2. The number of Units outstanding on the last business
day of such calendar year;
3. The Redemption Price based on the last evaluation
made during such calendar year;
4. The amount actually distributed during such calendar
year from the Income and Capital Accounts separately stated,
expressed both as total dollar amounts and as dollar amounts
per Unit outstanding on the Record Dates for each such
distribution.
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Rights of Unitholders. A Unitholder may at any time tender Units to
the Trustee for redemption. The death or incapacity of any Unitholder
will not operate to terminate a Trust Fund nor entitle legal
representatives or heirs to claim an accounting or to bring any action or
proceeding in any court for partition or winding up of a Trust Fund.
No Unitholder shall have the right to control the operation and
management of a Trust Fund in any manner, except to vote with respect to
the amendment of the Trust Agreement or termination of a Trust Fund.
INVESTMENT SUPERVISION
The Trust Funds are unit investment trusts and are not "actively
managed" funds. Traditional methods of investment management for a
managed fund typically involve frequent changes in a portfolio of
securities on the basis of economic, financial and market analyses. The
portfolios of the Trust Funds, however, will not be actively managed and
therefore the adverse financial condition of an issuer will not
necessarily require the sale of its securities from a portfolio. However,
the Sponsor may direct the Trustee to dispose of Securities upon default
in payment of amounts due on debt obligations of the issuer of the
Securities or upon a decline in price or the occurrence of other market
or credit factors that in the opinion of the Sponsor would make the
retention of such Securities in a Trust Fund detrimental to the interest
of the Unitholders. If the Trustee disposes of such Securities, the
Trustee cannot use the proceeds of the sale to purchase additional
Securities to be included in such Trust. Any proceeds must be distributed
directly to the Unitholders on a pro rata basis.
The Trustee may sell Securities, designated by the Sponsor, from a
Trust Fund for the purpose of redeeming Units of such Trust Fund tendered
for redemption and the payment of expenses.
ADMINISTRATION OF THE TRUSTS
The Trustee. The Trustee is The Bank of New York, a trust company
organized under the laws of New York. The Bank of New York has its unit
investment trust division offices at 101 Barclay Street, New York, New
York 10286, telephone 1-800-701-8178. The Bank of New York is subject
to supervision and examination by the Superintendent of Banks of the
State of New York and the Board of Governors of the Federal Reserve
System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not
participated in selecting the portfolios of the Trust Funds. For
information relating to the responsibilities of the Trustee under the
Trust Agreement, reference is made to the material set forth under
"Unitholders."
In accordance with the Trust Agreement, the Trustee shall keep
records of all transactions at its unit investment trust division office.
Such records shall include the name and address of, and the number of
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Units held by, every Unitholder of each Trust Fund. Such books and
records shall be open to inspection by any Unitholder of a Trust Fund at
all reasonable times during usual business hours. The Trustee shall make
such annual or other reports as may from time to time be required under
any applicable state or Federal statute, rule or regulation. The Trustee
shall keep a certified copy or duplicate original of the Trust Agreement
on file in its office available for inspection at all reasonable times
during usual business hours by any Unitholder, together with a current
list of the Securities held in a Trust Fund. Pursuant to the Trust
Agreement, the Trustee may employ one or more agents for the purpose of
custody and safeguarding of Securities comprising each Trust Fund.
Under the Trust Agreement, the Trustee or any successor trustee may
resign and be discharged of the trust created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the notice of
resignation to all Unitholders then of record, not less than sixty days
before the date specified in such notice when such resignation is to take
effect. The Sponsor upon receiving notice of such resignation is
obligated to appoint a successor trustee promptly. If, upon such
resignation, no successor trustee has been appointed and has accepted the
appointment within thirty days after notification, the retiring Trustee
may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may at any time remove the Trustee with or
without cause and appoint a successor trustee as provided in the Trust
Agreement. Notice of such removal and appointment shall be mailed to
each Unitholder by the Sponsor. Upon execution of a written acceptance of
such appointment by such successor trustee, all the rights, powers,
duties and obligations of the original Trustee shall vest in the
successor. The Trustee shall be a corporation organized under the laws of
the United States, or any state thereof, which is authorized under such
laws to exercise trust powers. The Trustee shall have at all times an
aggregate capital, surplus and undivided profits of not less than
$5,000,000.
The Sponsor. Ranson & Associates, Inc., the Sponsor of the Trusts,
is an investment banking firm created in 1995 by a number of former
owners and employees of Ranson Capital Corporation. On November 26,
1996, Ranson & Associates, Inc. purchased all existing unit investment
trusts sponsored by EVEREN Securities, Inc. Accordingly, Ranson &
Associates is the successor sponsor to unit investment trusts formerly
sponsored by EVEREN Unit Investment Trusts, a service of EVEREN
Securities, Inc. Ranson & Associates, is also the sponsor and successor
sponsor of Series of The Kansas Tax-Exempt Trust and Multi-State Series
of The Ranson Municipal Trust. Ranson & Associates, Inc. is the
successor to a series of companies, the first of which was originally
organized in Kansas in 1935. During its history, Ranson & Associates,
Inc. and its predecessors have been active in public and corporate
finance and have sold bonds and unit investment trusts and maintained
secondary market activities relating thereto. At present, Ranson &
Associates, Inc., which is a member of the National Association of
Securities Dealers, Inc., is the sponsor to each of the above-named unit
investment trusts and serves as the financial advisor and as an
underwriter for issuers in the Midwest and Southwest, especially in
Kansas, Missouri and Texas. The Company's offices are located at 250
North Rock Road, Suite 150, Wichita, Kansas 67206-2241.
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If at any time the Sponsor shall fail to perform any of its duties
under the Trust Agreement or shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or shall have its affairs taken over by
public authorities, then the Trustee may (a) appoint a successor sponsor
at rates of compensation deemed by the Trustee to be reasonable and not
exceeding such reasonable amounts as may be prescribed by the Securities
and Exchange Commission, or (b) terminate the Trust Agreement and
liquidate the Trust Fund involved as provided therein, or (c) continue to
act as Trustee without terminating the Trust Agreement.
The foregoing financial information with regard to the Sponsor
relates to the Sponsor only and not to the Trust Funds. Such information
is included in this Prospectus only for the purpose of informing
investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations with respect to the
Trust Funds. More comprehensive financial information can be obtained
upon request from the Sponsor.
The Evaluator. Ranson & Associates, Inc., the Sponsor, also serves
as Evaluator. The Evaluator may resign or be removed by the Trustee in
which even the Trustee is to use its best efforts to appoint a
satisfactory successor. Such resignation or removal shall become
effective upon acceptance of appointment by the successor evaluator. If
upon resignation of the Evaluator no successor has accepted appointment
within thirty days after notice of resignation, the Evaluator may apply
to a court of competent jurisdiction for the appointment of a successor.
Notice of such resignation or removal and appointment shall be mailed by
the Trustee to each Unitholder.
Amendment and Termination. The Trust Agreement may be amended by
the Trustee and the Sponsor without the consent of any of the
Unitholders: (1) to cure any ambiguity or to correct or supplement any
provision which may be defective or inconsistent; (2) to change any
provision thereof as may be required by the Securities and Exchange
Commission or any successor governmental agency; or (3) to make such
provisions as shall not materially adversely affect the interests of the
Unitholders. The Trust Amendment with respect to a Trust Fund may also be
amended in any respect by the Sponsor and the Trustee, or any of the
provisions thereof may be waived, with the consent of the holders of
Units representing 66-2/3% of the Units then outstanding of such Trust
Fund, provided that no such amendment or waiver will reduce the interest
of any Unitholder thereof without the consent of such Unitholder or
reduce the percentage of Units required to consent to any such amendment
or waiver without the consent of all Unitholders of such Trust Fund. In
no event shall the Trust Agreement be amended to increase the number of
Units of a Trust Fund issuable thereunder or to permit, except in
accordance with the provisions of the Trust Agreement, the acquisition of
any Securities in addition to or in substitution for those initially
deposited in a Trust Fund. The Trustee shall promptly notify Unitholders
of the substance of any such amendment.
The Trust Agreement provides that a Trust Fund shall terminate upon
the liquidation, redemption or other disposition of the last of the
Securities held in such Trust Fund but in no event is it to continue
beyond the Mandatory Termination Date set forth under "Essential
Information." If the value of a Trust Fund shall be less than the
applicable minimum value stated under "Essential Information" (40% of the
aggregate value of the Securities-based on the value at the date of
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deposit of such Securities into such Trust Fund), the Trustee may, in its
discretion, and shall, when so directed by the Sponsor, terminate the
Trust Fund. The Trust Fund may be terminated at any time by the holders
of Units representing 66-2/3% of the Units thereof then outstanding.
No later than the date specified under "Liquidation Period" set
forth under "Essential Information," the Trustee will begin to sell all
of the underlying Securities on behalf of Unitholders in connection with
the termination of a Trust Fund. The Sponsor has agreed to assist the
Trustee in these sales. The sale proceeds will be net of any incidental
expenses involved in the sales.
The Sponsor will attempt to sell the Securities as quickly as it can
during the Liquidation Period without in its judgment materially
adversely affecting the market price of the Securities, but it is
expected that all of the Securities will in any event be disposed of by
the end of the Liquidation Period. The Sponsor does not anticipate that
the period will be longer than one month, and it could be as short as one
day, depending on the liquidity of the Securities being sold. The
liquidity of any Security depends on the daily trading volume of the
Security and the amount that the Sponsor has available for sale on any
particular day.
It is expected (but not required) that the Sponsor will generally
follow the following guidelines in selling the Securities: for highly
liquid Securities, the Sponsor will generally sell Securities on the
first day of the Liquidation Period; for less liquid Securities, on each
of the first two days of the Liquidation Period, the Sponsor will
generally sell any amount of any underlying Securities at a price no less
than 1/2 of one point under the last closing sale price of those
Securities. Thereafter, the price limit will increase to one point under
the last closing sale price. After four days, the Sponsor currently
intends to sell at least a fraction of the remaining underlying
Securities, the numerator of which is one and the denominator of which is
the total number of days remaining (including that day) in the
Liquidation Period without any price restrictions. Of course, no
assurances can be given that the market value of the Securities will not
be adversely affected during the Liquidation Period.
Any Unitholder who wishes to receive a Distribution In Kind at the
termination of a Trust and who otherwise qualifies for such a
distribution (see "Redemption") must notify the Trustee no later than the
date indicated in Part Two for each Trust.
In the event of termination of a Trust Fund, written notice thereof
will be sent by the Trustee to all Unitholders of such Trust Fund. Within
a reasonable period after termination, the Trustee will sell any
Securities remaining in that Trust Fund and, after paying all expenses
and charges incurred by such Trust Fund, will distribute to Unitholders
thereof (upon surrender for cancellation of certificates for Units, if
issued) their pro rata share of the balances remaining in the Income and
Capital Accounts of the Trust Fund.
Limitations on Liability. The Sponsor: The Sponsor is liable for
the performance of its obligations arising from its responsibilities
under the Trust Agreement, but will be under no liability to the
Unitholders for taking any action or refraining from any action in good
faith pursuant to the Trust Agreement or for errors in judgment, except
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in cases of its own gross negligence, bad faith or willful misconduct.
The Sponsor shall not be liable or responsible in any way for
depreciation or loss incurred by reason of the sale of any Securities.
The Trustee: The Trust Agreement provides that the Trustee shall be
under no liability for any action taken in good faith in reliance upon
prima facie properly executed documents or for the disposition of monies,
Securities or certificates except by reason of its own negligence, bad
faith or willful misconduct, nor shall the Trustee be liable or
responsible in any way for depreciation or loss incurred by reason of the
sale by the Trustee of any Securities. In the event that the Sponsor
shall fail to act, the Trustee may act and shall not be liable for any
such action taken by it in good faith. The Trustee shall not be
personally liable for any taxes or other governmental charges imposed
upon or in respect of the Securities or upon the interest thereof. In
addition, the Trust Agreement contains other customary provisions
limiting the liability of the Trustee.
The Evaluator: The Trustee and Unitholders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility
for the accuracy thereof. The Trust Agreement provides that the
determinations made by the Evaluator shall be made in good faith upon the
basis of the best information available to it, provided, however, that
the Evaluator shall be under no liability to the Trustee or Unitholders
for errors in judgment, but shall be liable only for its gross
negligence, lack of good faith or willful misconduct.
EXPENSES OF THE TRUSTS
The Sponsor will not charge the Trusts any fees for services
performed as Sponsor. The Sponsor will receive a portion of the sale
commissions paid in connection with the purchase of Units and will share
in profits, if any, related to the deposit of Securities in the Trust
Funds. The Sponsor has borne all the expenses of creating and
establishing the Trusts including the cost of the initial preparation,
printing and execution of the Prospectus, Trust Agreement and
certificates, legal and accounting expenses, advertising and selling
expenses, payment of closing fees, the expenses of the Trustee and other
out-of-pocket expenses.
The Trustee receives for its services that fee set forth under
"Essential Information" in Part Two for each Trust. The Trustee's fee
which is calculated monthly is based on the largest number of Units
outstanding during the calendar year for which such compensation relates.
The Trustee's fees are payable monthly on or before the fifteenth day of
the month from the Income Account to the extent funds are available and
then from the Capital Account. The Trustee benefits to the extent there
are funds for future distributions, payment of expenses and redemptions
in the Capital and Income Accounts since these Accounts are non-interest
bearing and the amounts earned by the Trustee are retained by the
Trustee. Part of the Trustee's compensation for its services to the Trust
Funds is expected to result from the use of these funds.
For evaluation of Securities in the Trust Funds, the Evaluator shall
receive that fee set forth under "Essential Information" in Part Two for
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each Trust, payable monthly, based upon the largest number of Units
outstanding during the calendar year for which such compensation relates.
The Trustee's fees and the Evaluator's fees are deducted from the
Income Account of each Trust Fund to the extent funds are available and
then from the Capital Account. Each such fee may be increased without
approval of Unitholders by amounts not exceeding a proportionate increase
in the Consumer Price Index entitled "All Services Less Rent of Shelter,"
published by the United States Department of Labor, or any equivalent
index substituted therefor.
The following additional charges are or may be incurred by each
Trust Fund: (a) fees for the Trustee's extraordinary services;
(b) expenses of the Trustee (including legal and auditing expenses, but
not including any fees and expenses charged by an agent for custody and
safeguarding of Securities) and of counsel, if any; (c) various
governmental charges; (d) expenses and costs of any action taken by the
Trustee to protect a Trust or the rights and interests of the
Unitholders; (e) indemnification of the Trustee for any loss, liability
or expense incurred by it in the administration of a Trust not resulting
from gross negligence, bad faith or willful misconduct on its part;
(f) indemnification of the Sponsor for any loss, liability or expense
incurred in acting in that capacity without gross negligence, bad faith
or willful misconduct; and (g) expenditures incurred in contacting
Unitholders upon termination of a Trust Fund. The fees and expenses set
forth herein are payable out of the Trust Fund involved and, when owing
to the Trustee, are secured by a lien on that Trust Fund. The fees and
expenses set forth herein are payable out of the Trust involved. When
such fees and expenses are paid by or owing to the Trustee, they are
secured by a lien on the portfolio of such Trust Fund. Since the
Securities are all common stocks, and the income stream produced by
dividend payments is unpredictable, the Sponsor cannot provide any
assurance that dividends will be sufficient to meet any or all expenses
of a Trust Fund. If the balances in the Income and Capital Accounts are
insufficient to provide for amounts payable by a Trust, the Trustee has
the power to sell Securities to pay such amounts. These sales may result
in capital gains or losses to Unitholders. See "Federal Tax Status."
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters
relating to Federal tax law have been passed upon by Chapman and Cutler,
111 West Monroe Street, Chicago, Illinois 60603, as counsel for the
Sponsor.
INDEPENDENT AUDITORS
The statement of net assets, including the schedule of investments,
of each Trust appearing in Part Two for each Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors,
as set forth in their reports thereon appearing elsewhere therein and in
the Registration Statement, and are included in reliance upon such
reports given upon the authority of such firm as experts in accounting
and auditing.
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Kemper Equity Portfolio Trust
Series 7
(Utility Series)
Part Two
Dated April 30, 1997
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NOTE: Part Two of this Prospectus May Not Be Distributed Unless Accompanied by
Part One.
<PAGE>
<TABLE>
Kemper Equity Portfolio Trust
Series 7
(Utility Series)
Essential Information
As of December 31, 1996
Sponsor and Evaluator: Ranson & Associates, Inc.
Trustee: The Bank of New York Co.
<CAPTION>
General Information
<S> <C>
Aggregate Value of Securities in Trust $6,039,144
Number of Units 545,918
Fractional Undivided Interest in the Trust per Unit 1/545,918
Public Offering Price per Unit:
Aggregate Value of Securities in the Trust $6,039,144
Aggregate Value of Securities per Unit $11.062
Net Cash per Unit $(.140)
Sales Charge of 2.25% (2.302% of net
amount invested) per Unit $.251
Public Offering Price per Unit $11.173
Redemption Price per Unit $10.922
</TABLE>
[FN]
Minimum Value of the Trust under which Trust agreement may be terminated if
value of Trust Trust Agreement may be Terminated is less than 40% of the value
of the Securities when deposited in the portfolio.
<PAGE>
Report of Independent Auditors
Unitholders
Kemper Equity Portfolio Trust
Series 7 (Utility Series)
We have audited the accompanying statement of assets and liabilities of Kemper
Equity Portfolio Trust Series 7 (Utility Series) including the schedule of
investments, as of December 31, 1996, and the related statements of operations
and changes in net assets for each of the two years in the period then ended and
for the period from April 19, 1994 (Date of Deposit) to December 31, 1994.
These financial statements are the responsibility of the Trust's sponsor. Our
responsibility is to express an opinion on these financial statements based on
our 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 investments owned as of December 31, 1996, by
correspondence with the custodial bank. An audit also includes assessing the
accounting principles used and significant estimates made by the sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our 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 Kemper Equity Portfolio Trust
Series 7 (Utility Series) at December 31, 1996, and the results of its
operations and changes in its net assets for the periods indicated above in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Kansas City, Missouri
March 31, 1997
<PAGE>
Kemper Equity Portfolio Trust
Series 7
(Utility Series)
Statement of Assets and Liabilities
December 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Investments, at value (cost $4,923,486) $6,039,144
Dividends receivable 23,576
Cash 8,502
---------
Total assets 6,071,222
Liabilities and net assets
Accrued liabilities 2,306
Distribution payable 88,575
---------
90,881
Net assets, applicable to 545,918 Units outstanding:
Cost of Trust assets $4,923,486
Unrealized appreciation 1,115,658
Distributable funds (58,803)
-------------
Net assets $5,980,341
=========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Equity Portfolio Trust
Series 7
(Utility Series)
Statements of Operations
<TABLE>
<CAPTION>
Period from
April 19,
1994 to
Year ended December 31 December 31,
1996 1995 1994
<S> <C> <C> <C>
--------- --------- ---------
Investment income - dividends $447,684 $599,474 $370,041
Expenses:
Trustee's fees and related expenses 8,927 11,015 5,279
Evaluator's fees and portfolio
surveillance fees 2,174 4,185 2,065
--------- --------- ---------
Total expenses 11,101 15,200 7,344
--------- --------- ---------
Net investment income 436,583 584,274 362,697
Realized and unrealized gain (loss) on
investments:
Realized gain 293,288 63,697 -
Unrealized appreciation (depreciation)
during the period (399,001) 1,701,671 (187,012)
--------- --------- ---------
Net gain (loss) on investments (105,713) 1,765,368 (187,012)
--------- --------- ---------
Net increase in net assets resulting
from operations $330,870 $2,349,642 $175,685
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
Kemper Equity Portfolio Trust
Series 7
(Utility Series)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Period from
April 19,
1994 to
Year ended December 31 December 31,
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Operations:
Net investment income $436,583 $584,274 $362,697
Realized gain on investments 293,288 63,697 -
Unrealized appreciation (depreciation)
on investments during the period (399,001) 1,701,671 (187,012)
--------- --------- ---------
Net increase in net assets resulting
from operations 330,870 2,349,642 175,685
Distributions to Unitholders:
Net investment income (449,002) (595,241) (321,491)
Capital transactions:
Issuance of 944,478 Units - - 8,739,037
Issuance of 52,472 Units - 493,263 -
Redemption of 163,798 Units (1,652,791) -
Redemption of 287,234 Units (3,089,631) - -
--------- --------- ---------
Total increase (decrease) in net assets (3,207,763) 594,873 8,593,231
Net assets:
At the beginning of the period 9,188,104 8,593,231 -
--------- --------- ---------
At the end of the period (including
distributable funds applicable to
Trust Units of $58,803, $30,581 and
$41,206 at December 31, 1996, 1995
1994, respectively) $5,980,341 $9,188,104 $8,593,231
========= ========= =========
Trust Units outstanding at the end of
the period 545,918 833,152 944,478
========= ========= =========
Net asset value per Unit at the end
of the period $11.12 $11.03 $9.10
========= ========= =========
</TABLE>
[FN]
See accompanying notes to financial statements.
<PAGE>
<TABLE>
Kemper Equity Portfolio Trust
Series 7
(Utility Series)
Schedule of Investments
December 31, 1996
<CAPTION>
Shares Name of Issuer Market Value
------ --------------------- ------
<S> <C> <C>
10,963 Allegheny Power System, Inc. $331,631.00
3,007 Boston Edison Company 80,437.00
8,831 Cinergy Corporation 294,735.00
6,299 Consolidated Edison Company 184,246.00
of New York, Inc.
8,983 DPL, Inc. 218,960.00
10,517 Detroit Edison Company 340,488.00
7,611 Dominion Resources, Inc. 292,072.00
19,150 Edison International 380,606.00
9,013 Entergy Corporation 248,984.00
8,778 FPL Group, Inc. 402,691.00
10,990 General Public Utilities Corporation 366,791.00
14,373 IPALCO Enterprises, Inc. 389,868.00
14,706 Kansas City Power & Light Company 417,283.00
12,758 Long Island Lighting Company 280,676.00
9,874 Minnesota Power & Light Company 271,535.00
7,923 Pacific Gas and Electric Company 166,383.00
18,117 Pacificorp 369,134.00
9,767 Peco Energy Comany 245,396.00
10,527 Public Service Company of Colorado 407,921.00
15,439 Southern Company 349,307.00
----------
TOTALS $6,039,144.00
===========
</TABLE>
[FN]
See accompanying notes to financial statements
<PAGE>
Kemper Equity Portfolio Trust
Series 7
(Utility Series)
Notes to Financial Statements
1. Significant Accounting Policies
Trust Sponsor and Evaluator
From the Trust's date of deposit through November 26, 1996, the Trust's sponsor
and evaluator was EVEREN Unit Investment Trusts (EVEREN), or its predecessor
entity, Kemper Unit Investment Trusts. On that date, Zurich Kemper Investments,
Inc. acquired EVEREN and assigned substantially all of its unit investment trust
business to Ranson & Associates, Inc., which serves as the Trust's sponsor and
evaluator.
Valuation of Securities
Stocks are valued at closing bid prices as determined by Ranson & Associates,
Inc.. If there are no appropriate prices available from a national securities
exchange, then the prices will be determined as follows:(a) current bid prices
for comparable securities, (b) appraisal of the value of the Stocks in good
faith on the bid side of the market, or (c) by any
combination of the above.
Cost of Securities
Cost of the Trust's Stocks is based on the offer prices of the Stocks on the
dates of deposit of such Securities acquired during the primary sales period, as
determined by the Evaluator. Realized gain (loss) from investment transactions
is reported on a first-in, first out basis.
Investment Income
Dividends are recorded on the ex-dividend date.
2. Unrealized Appreciation and Depreciation
Following is an analysis of net unrealized appreciation at December 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation $1,153,795
Gross unrealized depreciation (38,137)
----------
Net unrealized appreciation $1,115,658
=========
</TABLE>
3. Federal Income Taxes
The Trust is not an association taxable as a corporation for federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of the Trust under Subpart E, Subchapter J of Chapter 1 of the Internal Revenue
Code of 1986, as amended. Accordingly, no provision has been made for federal
income taxes.
4. Other Information
Cost to Investors
The cost to initial investors of Units of the Trust was based on the aggregate
value of the Stocks in the Trust valued at the closing prices on the offer side
of the market on the business day prior to the Date of Deposit, plus or minus a
pro rata share of any distributable funds, plus a sales charge of 4.00% (4.167%
of the net amount invested). The Public Offering Price for secondary market
transactions is based on the aggregate market value of the Securities valued at
the closing bid prices, plus or minus a pro rata share of any distributable
funds, plus a sales charge of 4.00% (equivalent to 4.167% of the net amount
invested).
The sponsor intends to permit officers, directors and employees of the sponsor
and its affiliates and, in the discretion of the sponsor, registered
representatives of selling firms to purchase Units of the Trust without a sales
charge.
<PAGE>
Kemper Equity Portfolio Trust
Series 7
(Utility Series)
Notes to Financial Statements (continued)
Distributions
Distributions of net investment income to Unitholders are declared and paid
quarterly. Income distributions per Unit, on a record date basis, are $.65, $.63
and $.40 for the years ended December 31, 1996, 1995 and 1994, respectively.
5. Change of Trustee
On March 1, 1996, The Bank of New York Co. assumed all trustee responsibilities
from Investors Fiduciary Trust Company.
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our report dated March 31, 1997, in this Post-Effective
Amendment to the Registration Statement (Form S-6) and related Prospectus of
Kemper Equity Portfolio Series 7 (Utility Series) dated April 30, 1997.
Ernst & Young LLP
Kansas City, Missouri
April 30, 1997
<PAGE>
Contents of Post-Effective Amendment
To Registration Statement
This Post-Effective amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933,
The Registrant, Kemper Equity Portfolio Trust, Series 7,
certifies that it meets all of the requirements for effectiveness
of this registration statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Wichita,
and State of Kansas, on the 30th day of April, 1997.
Kemper Equity Portfolio Trust,
Series 7
Registrant
By: Ranson & Associates, Inc.
Depositor
By: Robin Pinkerton
President
Pursuant to the requirements of the Securities Act of 1933,
this Amendment to the Registration Statement has been signed
below on April 30, 1997 by the following persons, who constitute
a majority of the Board of Directors of Ranson & Associates, Inc.
Signature Title
Douglas K. Rogers Executive Vice and President and Director
Douglas K. Rogers
Alex R. Meitzner Chairman of the Board and Director
Alex R. Meitzner
Robin K. Pinkerton President, Secretary, Treasurer and
Robin K. Pinkerton Director
Robin Pinkerton
An executed copy of each of the related powers of attorney
was filed with the Securities and Exchange Commission in
connection with the Registration Statement on Form S-6 of The
Kansas Tax-Exempt Trust, Series 51 (File No. 33-46376) and
Series 52 (File No. 33-47687) and the same are hereby
incorporated herein by this reference.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM KEMPER EQUITY PORTFOLIO TRUST SERIES 7
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> KEMPER EQUITY PORTFOLIO TRUST SERIES 7
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Dec-31-1996
<INVESTMENTS-AT-COST> 4,923,486
<INVESTMENTS-AT-VALUE> 6,039,144
<RECEIVABLES> 23,576
<ASSETS-OTHER> 8,502
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,071,222
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 90,881
<TOTAL-LIABILITIES> 90,881
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,864,683
<SHARES-COMMON-STOCK> 545,918
<SHARES-COMMON-PRIOR> 833,152
<ACCUMULATED-NII-CURRENT> 17,822
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,115,658
<NET-ASSETS> 5,980,341
<DIVIDEND-INCOME> 447,684
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 11,101
<NET-INVESTMENT-INCOME> (11,101)
<REALIZED-GAINS-CURRENT> 293,288
<APPREC-INCREASE-CURRENT> (399,001)
<NET-CHANGE-FROM-OPS> (116,814)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 449,002
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (565,816)
<ACCUMULATED-NII-PRIOR> 30,239
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
