File No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust: THE KANSAS TAX-EXEMPT TRUST, SERIES 77
B. Name of Depositor: RANSON CAPITAL CORPORATION
C. Complete address of Depositor's principal executive offices:
120 South Market, Suite 450
Wichita, Kansas 67202
D. Name and complete address of agents for service:
RANSON CAPITAL CORPORATION
Attention: John A. Ranson
120 South Market, Suite 450
Wichita, Kansas 67202
CHAPMAN AND CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title and amount of securities being registered: 1,000* Units
F. Proposed maximum offering price to the public of the securities being
registered ($1,010 per Unit**): $1,010,000
G. Amount of filing fee, computed at one-twenty-ninth of 1 percent of the
proposed maximum aggregate offering price to the public: $348.28
H. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT
* 500 Units registered for primary distribution.
500 Units registered for resale by Depositor of Units previously sold in
primary distribution.
** ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE
____________________________________________________________________________
* The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
THE KANSAS TAX-EXEMPT TRUST
SERIES 77
CROSS REFERENCE SHEET
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Item Number Form S-6 Heading in Prospectus
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust )
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Sponsor Information
3. Name and address of Trustee ) Trustee Information
4. Name and address of principal ) Sponsor Information
underwriter
5. Organization of trust ) Summary of the Trust
6. Execution and termination of ) Summary of the Trust
Trust Indenture and Agreement
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) Description of Trust Portfolio-
) General
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. General information regarding ) General Summary of Information
trust's securities and rights )
of security holders ) Redemption and Repurchase
) of Units
) Description of Trust Portfolio-
) General
) Other Rights of Certificate-
) holders
) Sponsor Information
) Trustee Information
) Tax Status (Federal, State,
) Capital Gains)
11. Type of securities comprising ) Prospectus Front Cover Page
units )
12. Certain information regarding )*
periodic payment certificates )
13. (a) Loan, fees, charges and )
expenses ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Estimated Current Return
) Accrued Interest to Carry
) Public Offering Information
) Expenses of the Trust
(b) Certain information regarding )
periodic payment plan certificates ) *
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Estimated Current Return
) Public Offering Information
) Accrued Interest to Carry
) Sponsor Information
)
(d) Certain other fees, ) Other Rights of Certificate-
expenses or charges ) holders
payable by holders )
(e) Certain profits to be received )
by depositor, principal underwriter, ) Sponsor Information
trustee or any affiliated persons )
(f) Ratio of annual charges to income ) *
14. Issuance of trust's securities ) Summary of the Trust
) Public Offering Information
15. Receipt and handling of payments ) *
from purchasers )
) Trust Administration
16. Acquisition and disposition of ) Summary of the Trust
underlying securities ) Description of Trust Portfolio
) Trustee Information
17. Withdrawal or redemption ) Redemption and Repurchase
) of Units
) Sponsor Information
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Accrued Interest to Carry
) Distributions of Interest and
) Principal
(b) Reinvestment of distributions ) *
(c) Reserves or special funds ) Expenses of the Trust
) Summary of the Trust
(d) Schedule of distributions ) *
19. records, accounts and reports ) Other Rights of Certificate-
) holders
20. Certain miscellaneous provisions ) Summary of the Trust
of Trust Agreement ) Sponsor Information
) Trustee Information
21. Loans to security holders ) *
22. Limitations on liability ) Summary of the Trust
23. Bonding arrangements ) *
24. Other material provisions of ) *
trust indenture or agreement )
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of Depositor ) Sponsor Information
26. Fees received by Depositor ) *
27. Business of Depositor ) Sponsor Information
28. Certain information as to )
officials and affiliated ) *
persons of Depositor )
29. Companies owning securities of ) *
Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of Depositor ) *
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
35.Distribution of trust's securities ) Prospectus Front Cover Page
by states ) Objectives of the Trust
36.Suspension of sales of trust's ) *
securities )
37.Revocation of authority to ) *
distribute securities )
38. (a) Method of distribution )
(b) Underwriting agreements ) Public Offering Information
(c) Selling agreement )
39. (a) Organization of principal )
underwriter ) Sponsor Information
(b) N.A.S.D. membership by )
principal underwriter )
)
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Sponsor Information
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of the trust ) *
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Public Offering Information
) Accrued Interest to Carry
) Redemption and Repurchase
) of Units
(b) Schedule as to offering ) *
price )
(c) Variation in offering ) Accrued Interest to Carry
price to certain persons ) Public Offering Information
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Estimated Current Return
) Accrued Interest to Carry
) Public Offering Information
) Redemption and Repurchase
) of Units
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Sponsor Information
in underlying securities ) Redemption and Repurchase
) of Units
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of ) Trustee Information
trustee )
49. Fees and expenses of trustee ) Summary of Essential Financial
) Information
) Expenses of the Trust
)
50. Trustee's lien ) Accrued Interest to Carry
) Distribution of Interest and
) Principal
) Expenses of the Trust
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's )
securities ) *
52. (a) Provisions of trust agreement ) Trustee Information
with respect to replacement or ) Description of Trust Portfolio-
elimination of portfolio securities ) Replacement Bonds
(b) Transactions involving )
elimination of underlying securities ) *
(c) Policy regarding substitution or ) Trustee Information
elimination of underlying securities ) Description of Trust Portfolio-
) Replacement Bonds
(d) Fundamental policy not ) *
otherwise covered )
53. Tax status of trust ) Tax Status (Federal, State,
) Capital Gains)
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. )
58. )
59. Financial statements (Instructions ) Report of Allen, Gibbs &
1(c) to Form S-6) ) Houlik, L.C. Independent
) Auditors
) Statement of Net Assets
Preliminary Prospectus Dated August 17, 1995
THE KANSAS TAX-EXEMPT TRUST
1,000 Units Series 77 (A Unit Investment Trust)
The attached final Prospectus for a prior Series of the Trust is hereby used
as a preliminary Prospectus for the above state Series. The narrative
information and structure of the attached final Prospectus will be
substantially the same as that of the final Prospectus for this Series.
Information with respect to pricing, the number of Units, dates and summary
information regarding the characteristics of securities to be deposited in
this Series is not now available and will be different since each Series has
a unique portfolio. Accordingly, the information contained herein with regard
to the previous Series should be considered as being included for
informational purposes only. Ratings of the securities in this Series are
expected to be comparable to those of the securities deposited in the
previous Series. However, the Estimated Current Return for this Series will
depend on the interest rates and offering prices for the securities in this
Series and may vary materially from that of the previous Series.
A registration statement relating to the units of this Series has been filed
with the Securities and Exchange Commission but has not yet become effective.
Information contained herein is subject to completion or amendment. Such
Units may not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This Prospectus shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be any
sale of the Units in any state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such state.
PROSPECTUS THE SERIES 76
KANSAS TAX-EXEMPT TRUST
2,920 UNITS
AVAILABLE ONLY TO KANSAS RESIDENTS
THE TRUST. The Trust initially consists of bonds and delivery statements
relating to contracts to purchase bonds and, thereafter, will consist of a
$2,825,000 aggregate principal amount portfolio comprised of interest bearing
obligations issued by or on behalf of municipalities or other governmental
authorities in the State of Kansas (the "Bonds" or "Securities"). In the
opinion of counsel, interest income to the Trust and to Certificateholders,
with certain exceptions, is exempt under existing law from Federal and Kansas
state income taxes and local Kansas intangible personal property taxes, but
may be subject to the Federal alternative minimum tax and other state and
local taxes. Capital gains, if any, are subject to tax. The objectives of the
Trust include 1) interest income which is exempt from Federal income taxes,
Kansas state income taxes and intangible personal property taxes levied by
Kansas counties, cities and townships, 2) conservation of capital, and 3)
liquidity of investment (see "Objectives of the Trust"). The payment of
interest and the preservation of capital are dependent upon the continuing
ability of the issuers and/or obligors of the Bonds to meet their respective
obligations. Certain of the Bonds are obligations which derive their payment
from mortgage loans. A substantial portion of such bonds will probably be
redeemed prior to their scheduled maturities; any such early redemption will
reduce the aggregate principal amount of the Trust and may also affect the
Estimated Long-Term Return and the Estimated Current Return. The Sponsor has
a limited right to substitute other tax-exempt bonds in the Trust portfolio in
the event of a failed contract. There is no assurance that the Trust's
objectives will be met. The Sponsor of the Trust is Ranson Capital
Corporation, Suite 450, 120 South Market Street, Wichita, Kansas 67202.
PUBLIC OFFERING PRICE. The Public Offering Price of the Units during the
initial offering period is equal to the aggregate offering price of the Bonds
in the portfolio divided by the number of Units outstanding, plus a sales
charge equal to 4.90% of the Public Offering Price (5.152% of the aggregate
offering price of the Bonds). After the initial public offering period, the
secondary market public offering price will be equal to the aggregate bid
price of the Bonds in the portfolio of the Trust divided by the number of
Units outstanding, plus a sales charge of 5.50% of the Public Offering Price
(5.820% of the aggregate bid price of the Bonds). If the Bonds in the Trust
were available for direct purchase by investors, the purchase price of the
Bonds would not include the sales charge included in the Public Offering Price
of the Units. In addition, on transactions entered into on and after June
23, 1995, there will be added an amount equal to the accrued interest from
June 27, 1995 to the date of settlement (three business days after order) less
distributions from the Interest Account subsequent to June 27, 1995 (the
"First Settlement Date"). If Units were available for purchase at the opening
of business on the Date of Deposit, the Public Offering Price per Unit would
have been $999.84. During the initial offering period, the sales charge is
reduced on a graduated scale for sales involving at least 150 Units. See
"Public Offering Information." The value of the Bonds will fluctuate with
market and credit conditions, including any changes in interest rate levels.
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.
Please read this Prospectus and retain it for future reference.
The date of this Prospectus is June 22, 1995.
RANSON CAPITAL CORPORATION
SPONSOR
THE UNITS. Each Unit represents a fractional undivided interest in the
principal and net income of the Trust in the ratio of one Unit for each
$967.47 principal value of Bonds originally deposited in the Trust.
Initially, Units will be offered for sale in the minimum amount of five Units.
DISTRIBUTIONS. Distributions of interest received by the Trust will be made
on a monthly basis (pro-rated on an annual basis). The first distribution to
Certificateholders will be made on August 1, 1995 to holders of record on July
15, 1995, and thereafter distributions will be made monthly on the first day
of each month to record holders on the fifteenth day of the preceding month.
Distributions of funds in the Principal Account, if any, will also be made
monthly on the first day of each month to record holders on the fifteenth day
of the preceding month.
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN. The
Estimated Current Return and Estimated Long-Term Return to Certificateholders
as of June 21, 1995, the business day prior to the Date of Deposit, were as
set forth under "Summary of Essential Financial Information." The methods of
calculating Estimated Current Return and Estimated Long-Term Return are set
forth in the footnotes to "Summary of Essential Financial Information."
REDEMPTION AND MARKET FOR UNITS. A Certificateholder may redeem Units at
the office of the Trustee, Investors Fiduciary Trust Company ("IFTC"), at
prices based upon the bid prices of the Bonds. In addition, although not
obligated to do so, the Sponsor intends to maintain a secondary market for the
Units at prices based upon the aggregate bid price of the Bonds in the
portfolio of the Trust (see "Redemption and Repurchase of Units").
2
<TABLE>
<CAPTION>
THE KANSAS TAX-EXEMPT TRUST
SERIES 76
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
As of June 22, 1995, the business day prior to the Date of Deposit
SPONSOR AND EVALUATOR: RANSON CAPITAL CORPORATION
TRUSTEE: INVESTORS FIDUCIARY TRUST COMPANY
<S> <C>
Principal Amount of Bonds in Trust $ 2,825,000
Number of Units 2,920
Fractional Undivided Interest in Trust per Unit 1/2,920
Principal Amount (Par Value) of Bonds per Unit(1) $ 967.47
Aggregate Offering Price of Bonds in the Trust $ 2,776,473
Aggregate Offering Price of Bonds per Unit $ 950.85
Plus Sales Charge 4.90% (5.152% of the Aggregate
Offering Price of the Bonds) $ 48.99
Public Offering Price per Unit(2) $ 999.84
Redemption Price per Unit(3) $ 940.21
Sponsor's Initial Repurchase Price per Unit(3)(4) $ 950.85
Excess of Public Offering Price per Unit Over
Redemption Price per Unit $ 59.63
Excess of Public Offering Price per Unit Over
Sponsor's Initial Repurchase Price per Unit $ 48.99
Estimated Annual Interest Income per Unit $ 56.25
Less: Estimated Annual Expense per Unit $ 2.79
Estimated Annual Net Interest Income per Unit $ 53.46
Estimated Daily Rate of Net Interest Income Accrual per Unit $ .1485
Estimated Current Return(5)(6)(7) 5.35%
Estimated Long-Term Return(5)(6)(7) 5.28%
Initial Distribution(August 1, 1995) $2.67 per Unit
First Settlement Date June 27, 1995
Minimum Principal Distribution $1.00 per Unit
Mandatory Termination Date December 1, 2024
Minimum Principal Amount of Bonds of Trust Under Which
Indenture May Be Terminated $565,000
Distribution Dates First day of every month commencing August 1, 1995
Trustee's Annual Fee $1.22 per $1,000 principal amount of Bonds,
exclusive of expenses of the Trust.
Evaluator's Annual Fee $.15 per $1,000 principal amount of Bonds
Annual Audit Fee $.40 per Unit
</TABLE>
[FN]
Evaluations for purpose of sale, purchase or redemption of Units are made as
of 3:00 P.M. Central time on days of trading on the New York Stock Exchange
next following receipt of an order for a sale or purchase of Units or receipt
by the Trustee of Units tendered for redemption.
(1) Many unit investment trusts comprised of municipal securities issue a
number of units such that each unit represents approximately $1,000
principal amount of underlying securities. The Sponsor on the other hand
in determining the number of Trust Units has elected not to follow this
format but rather to provide for that number of Units which will establish
as of the Date of Deposit a Public Offering Price per Unit of approximately
$1,000.
3
(2) No accrued interest will be added for any person contracting to purchase
Units on the Date of Deposit. Anyone ordering Units after such date will
pay accrued interest from the First Settlement Date to the date of
settlement (three business days after order) less distributions from the
Interest Account subsequent to the First Settlement Date. A person will
become the owner of Units on the date of settlement provided payment has
been received.
(3) Plus accrued interest to the settlement date in the case of sale or to
the date of tender in the case of redemption.
(4) The Sponsor intends to maintain a secondary market for Units at prices
based on the aggregate bid price of the Bonds in the Trust; however, during
the initial offering period such prices will be based on the aggregate
offering price of the Bonds.
(5) The Estimated Current Return and Estimated Long-Term Return are
increased for transactions entitled to a reduced sales charge (see "Public
Offering Information").
(6) The Estimated Current Return is calculated by dividing the estimated net
annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities while the
Public Offering Price will vary with changes in the offering price of the
underlying Securities; therefore, there is no assurance that the present
Estimated Current Return indicated above will be realized in the future.
The Estimated Long-Term Return is calculated using a formula which (1)
takes into consideration, and determines and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Bonds in the Trust and (2) takes into account the
expenses and sales charge associated with each Trust Unit. Since the
market values and estimated retirements of the Bonds and the expenses of
the Trust will change, there is no assurance that the present Estimated
Long-Term Return as indicated above will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to
differ because the calculation of the Estimated Long-Term Return reflects
the estimated date and amount of principal returned while the Estimated
Current Return calculation includes only net annual interest income and
Public Offering Price. Neither rate reflects the true return to
Certificateholders which is lower because neither includes the effect of
the delay in the first payment to Certificateholders.
(7) These figures are based on estimated per Unit cash flows. Estimated
cash flows will vary with changes in fees and expenses, with changes in
current interest rates and with the principal prepayment, redemption,
maturity, call, exchange or sale of the underlying Securities. The
estimated cash flows for this Trust are set forth under the section titled
"Estimated Cash Flows to Unitholders."
4
SUMMARY OF THE TRUST
The Kansas Tax-Exempt Trust, Series 76 (the "Trust") is one of a series of
unit investment trusts created under the laws of the State of Missouri
pursuant to a Trust Indenture and Agreement, dated June 22, 1995 (the
"Indenture"), between Ranson Capital Corporation, as Sponsor, and Investors
Fiduciary Trust Company, as Trustee.
The Trust consists of a portfolio of interest bearing obligations (or
delivery statements relating to contracts to purchase obligations) issued by
or on behalf of the State of Kansas and political subdivisions, municipalities
and authorities thereof, the interest on which is excludable, in the opinion
of recognized bond counsel, from Federal gross income, and is exempt from
Kansas state income tax (to Kansas residents) and local Kansas intangible
personal property taxes. However, in the case of corporations, interest on
all obligations held by the Trust may be subject to the alternative minimum
tax for Federal income tax purposes. Accordingly, the Trust may be
appropriate only for investors who are not subject to the alternative minimum
tax. See "Tax Status (Federal, State, Capital Gains)." An investment in the
Trust should be made with an understanding of the risks associated with an
investment in such obligations. Fluctuations in interest rates may cause
corresponding fluctuations in the value of the Bonds in the portfolio. The
Sponsor cannot predict whether the value of the Bonds in the portfolio will
increase or decrease.
On the Date of Deposit, the Sponsor deposited with the Trustee an aggregate
of $2,825,000 principal amount of interest-bearing obligations, including
delivery statements relating to contracts for the purchase of certain such
obligations. Upon deposit of such Bonds the Trustee delivered to the Sponsor
a certificate evidencing the ownership of 2,920 Units of the Trust, which are
offered for sale by this Prospectus. Each Unit initially offered represents a
1/2,920 undivided interest in the Trust. To the extent that any Units are
redeemed by the Trustee, the fractional undivided interest in the Trust
represented by each unredeemed Unit will increase, although the actual
interest in the Trust represented by such fraction will remain unchanged.
Units in the Trust will remain outstanding until redeemed upon tender to the
Trustee by Certificateholders, which may include the Sponsor, or until the
termination of the Indenture.
The Indenture may be amended at any time by consent of Certificateholders
representing at least 51% of the Units of the Trust then outstanding. The
Indenture may also be amended by the Trustee and the Sponsor without the
consent of any of the Certificateholders 1) to cure any ambiguity or to
correct or supplement any provision thereof which may be defective or
inconsistent, or 2) to make such other provisions as shall not adversely
affect the interest of the Certificateholders, provided, however, that the
Indenture may not be amended to increase the number of Units issuable
thereunder or to permit the deposit or acquisition of bonds either in addition
to, or in substitution for any of the Bonds initially deposited in the Trust
except in connection with the limited right of substitution of Replacement
Bonds for failed Bonds (see "Description of Trust Portfolio") and for the
substitution of refunding bonds under certain circumstances. The Trustee
shall advise the Certificateholders of any amendment promptly after the
execution thereof.
The Trust may be terminated at any time by consent of Certificateholders
representing at least 51% of the Units of the Trust then outstanding or by the
Trustee when the value of the Trust, as shown by any semi-annual evaluation,
is less than 20% of the original principal amount of the Trust and will be
liquidated by the Trustee in the event that a sufficient number of Units not
yet sold are tendered for redemption by the Sponsor and the Underwriters
thereby reducing the net worth of the Trust to less than 40% of the principal
5
amount of the Bonds originally deposited in the portfolio. The Indenture will
terminate upon the redemption, sale or other disposition of the last Bond held
in the Trust, but in no event shall it continue beyond the end of the calendar
year preceding the fiftieth anniversary of its execution.
Written notice of any termination specifying the time or times at which
Certificateholders may surrender their certificates for cancellation shall be
given by the Trustee to each Certificateholder at the address appearing on the
registration books of the Trust maintained by the Trustee. The Trustee will
begin to liquidate any Bonds held in the Trust within a reasonable period of
time from said notification and shall deduct from the proceeds any accrued
costs, expenses or indemnities provided by the Indenture, including any
compensation due the Trustee, any costs of liquidation and any amounts
required for payment of any applicable taxes, governmental charges or final
operating costs of the Trust.
The Trustee shall then distribute to Certificateholders their pro rata
shares of the remaining balances in the Principal and Interest Accounts
together with a final distribution statement which will be in substantially
the same form as the annual distribution statement (see "Other Rights of
Certificateholders"). Any amount held by the Trustee in any reserve account
will be distributed when the Trustee determines the reserve is no longer
necessary in the same manner as the final distribution from the Principal and
Interest Accounts (see "Distribution of Interest and Principal").
The Sponsor and the Trustee shall be under no liability to
Certificateholders for taking any action or for refraining from any action in
good faith pursuant to the indenture, or for errors in judgment, but shall be
liable only for their own negligence, lack of good faith, willful misconduct
or reckless disregard of their duties. The Trustee shall not be liable for
depreciation or loss incurred by reason of the sale by the Trustee of any of
the Bonds. In the event of the failure of the Sponsor to act under the
Indenture, the Trustee may act thereunder and shall not be liable for any
action taken by it in good faith under the Indenture.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Bonds or upon the interest thereon or upon
it as Trustee under the Indenture or upon or in respect of the Trust which the
Trustee may be required to pay under any present or future law of the United
States of America or of any other taxing authority having jurisdiction.
Approximately 4% of the aggregate principal amount of the Bonds in the
Trust are "zero coupon" bonds. Zero coupon bonds are purchased at a deep
discount because the buyer receives only the right to receive a final payment
at the maturity of the bond and does not receive any periodic interest
payments. The effect of owning deep discount bonds which do not make current
interest payments (such as the zero coupon bonds) is that a fixed yield is
earned not only on the original investment but also, in effect, on all
discount earned during the life of such obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable
to reinvest the income on such obligation at a rate as high as the implicit
yield on the discount obligation, but at the same time eliminates the holder's
ability to reinvest at higher rates in the future. For this reason, zero
coupon bonds are subject to substantially greater price fluctuations during
periods of changing market interest rates than are securities of comparable
quality which pay interest currently. See also note (6) to "Notes to Trust
Portfolio."
6
DESCRIPTION OF TRUST PORTFOLIO
PORTFOLIO. The Trust consists of 6 obligations of issuers located in the
State of Kansas. One of the issues in the Trust is a general obligation of
the governmental entity issuing it or is backed by the taxing power thereof
representing 14.2% of principal amount of bonds in the Trust. The remaining
issues are payable directly or indirectly from the income of a specific
project or authority and are divided by source of revenue (and percentage of
principal amount to total Trust) as follows: Health Care, 1 (21.2%); Electric
Utility, 2 (42.5%); Multi-Family Housing, 1 (17.7%); and Single-Family
Housing, 1 (4.4%). The dollar weighted average maturity of the Bonds in the
Trust is 26.1 years. None of the issues in the Trust are subject to the
alternative minimum tax.
Since the Trust will invest substantially all of its assets in Kansas
municipal securities, the Trust is susceptible to political and economic
factors affecting issuers of Kansas municipal securities. According to the
1990 census, 2,477,574 people lived in Kansas, representing a 4.8% increase
over the 1980 census. Based on these numbers, Kansas ranked thirty-second in
the nation in population size. Based on statistics provided by the Kansas
Department of Commerce, Kansas ranked twenty-first in the nation in terms of
per capita income. Historically, agriculture and mining constituted the
principal industries in Kansas. Since the 1950's however, manufacturing,
governmental services and the services industry have steadily grown and as of
1992 approximately 24% of Kansas workers were in the trade (wholesale and
retail) sector, 23% in the services sector, 20% in the government sector, 15%
in the manufacturing sector, while financial and real estate, farming, mining,
transportation and public utilities, and construction accounted for the
remaining 18% of the work force. The 1992 unemployment rate was 4.2%. By
constitutional mandate, Kansas must operate within a balanced budget and
public debt may only be incurred for extraordinary purposes and then only to a
maximum of $1 million. As of August 31, 1994, the State of Kansas had no
general obligation bonds outstanding.
The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of Bonds and does not
purport to be a complete or exhaustive description of all adverse conditions
to which the issuers in the Trust are subject. Additionally, many factors
including national economic, social, and environmental policies and
conditions, which are not within the control of the issuers of Bonds, could
affect or could have an adverse impact on the financial condition of Kansas
and various agencies and political subdivisions located in Kansas. The
Sponsor is unable to predict whether or to what extent such factors or other
factors may affect the issuers of the Bonds, the market value or marketability
of the Bonds or the ability of the respective issuers of the Bonds acquired by
the Trust to pay interest on or principal of the Bonds.
Approximately 21% of the aggregate principal amount of Bonds in the Trust
are hospital revenue bonds. In view of this an investment in the Trust should
be made with an understanding of the characteristics of such issuers and the
risks which such an investment may entail. Ratings of bonds issued for health
care facilities are often based on feasibility studies that contain
projections of occupancy levels, revenues and expenses. A facility's gross
receipt and net income available for debt service will be affected by future
events and conditions including, among other things, demand for services and
the ability of the facility to provide the services required, physicians'
confidence in the facility, management capabilities, economic developments in
the service area, competition, efforts by insurers and governmental agencies
to limit rates, legislation establishing state rate-setting agencies,
expenses, the cost and possible unavailability of malpractice insurance, the
funding of Medicare, Medicaid and other similar third party payor programs,
and government regulation. Federal legislation requires a system of
prospective Medicare reimbursement which may restrict the flow of revenues to
hospitals and other facilities which are reimbursed for services provided
7
under the Medicare program. Future legislation or changes in the areas noted
above, among other things, would affect all hospitals to varying degrees and,
accordingly, any adverse changes in these areas may adversely affect the
ability of such issuers to make payment of principal and interest on Bonds
held in the portfolio of the Trust. Such adverse changes also may adversely
affect the ratings of the Bonds held in the portfolio of the Trust.
Approximately 42% of the aggregate principal amount of the Bonds consists
of obligations whose revenues are primarily derived from the sale of electric
energy. Utilities are generally subject to extensive regulation by state
utility commissions which, among other things, establish the rates which may
be charged and the appropriate rate of return on an approved asset base. The
problems faced by such issuers include the difficulty in obtaining approval
for timely and adequate rate increases from the governing public utility
commission, the difficulty in financing large construction programs, the
limitations on operations and increased costs and delays attributable to
environmental considerations, increased competition, recent reductions in
estimates of future demand for electricity in certain areas of the country,
the difficulty of the capital market in absorbing utility debt, the difficulty
in obtaining fuel at reasonable prices and the effect of energy conservation.
All of such issuers have been experiencing certain of these problems in
varying degrees. In addition, Federal, state and municipal governmental
authorities may from time to 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 such
Bonds to make payments of principal and/or interest on such Bonds.
Approximately 22% of the aggregate principal amount of the Bonds in the
Trust consists of obligations which derive their payment from mortgage loans.
No more than 25% of the Trust's total assets will be invested in mortgages
originated by the same financial institution. Certain of the Bonds in the
Trust may be single family mortgage revenue bonds issued for the purpose of
acquiring from originating financial institutions notes secured by mortgages
on residences located within the issuer's boundaries and owned by persons of
low or moderate income. In view of this, an investment in the Trust should be
made with an understanding of the characteristics of such issuers and the
risks which such an investment may entail. Mortgage loans are generally
partially or completely prepaid prior to their final maturities as a result of
events such as sale of the mortgaged premises, default, condemnation or
casualty loss. Because these bonds are subject to extraordinary mandatory
redemption in whole or in part from such prepayments on mortgage loans, a
substantial portion of such bonds will probably be redeemed prior to their
scheduled maturities or even prior to their ordinary call dates.
Extraordinary mandatory redemption without premium could also result from the
failure of the originating financial institutions to make mortgage loans in
sufficient amounts within a specified time period. Additionally, unusually
high rates of default on the underlying mortgage loans may reduce revenues
available for the payment of principal of or interest on such mortgage revenue
bonds. These bonds were issued under Section 103A of the Internal Revenue
Code, which Section contains certain requirements relating to the use of the
proceeds of such bonds in order for the interest on such bonds to retain its
tax-exempt status. In each case the issuer of the bonds has covenanted to
comply with applicable requirements and bond counsel to such issuer has issued
an opinion that the interest on the bonds is exempt from Federal income tax
under existing laws and regulations. Certain of the Bonds in the Trust may be
obligations of issuers whose revenues are primarily derived from mortgage
loans to housing projects for low to moderate income families. The ability of
such issuers to make debt service payments will be affected by events and
conditions affecting financed projects, including, among other things, the
achievement and maintenance of sufficient occupancy levels and adequate rental
income, increases in taxes, employment and income conditions prevailing in
local labor markets, utility costs and other operating expenses, the
managerial ability of project managers, changes in laws and governmental
regulations, the appropriation of subsidies and social and economic trends
8
affecting the localities in which the projects are located. The occupancy of
housing projects may be adversely affected by high rent levels and income
limitations imposed under Federal and state programs. Certain issuers of
housing bonds have considered various ways to redeem bonds they have issued
prior to the stated first redemption dates for such bonds. In one situation
an issuer, in reliance on its interpretation of certain language in the
indenture under which one of its bond issues was created, redeemed all of such
issue at par in spite of the fact that such indenture provided that the first
optional redemption was to include a premium over par and could not occur
prior to a later date. In connection with the housing bonds held by the
Trust, the Sponsor at the Date of Deposit is not aware that any of the
respective issuers of such Bonds are actively considering the redemption of
such Bonds prior to their respective stated initial call dates. For a general
discussion of the effects of Bond prepayments and redemptions on
Certificateholders who acquired Units at a time when such Bonds were valued in
excess of the principal amount or redemption price of such Bonds, see
"General" below.
REPLACEMENT BONDS. Because certain of the Bonds in the Trust may from
time to time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Certificateholders and will not be reinvested, no assurance can
be given that the Trust will retain for any length of time its present size
and composition. Neither the Sponsor nor the Trustee shall be liable in any
way for any default, failure or defect in any Bond. In the event of a failure
to deliver any Bond that has been purchased for the Trust under a contract,
including any Bonds purchased on a "delayed delivery" basis ("Failed Bonds"),
the Sponsor is authorized under the Indenture to direct the Trustee to acquire
other bonds ("Replacement Bonds") to make up the original corpus of the Trust.
The Replacement Bonds must be purchased within 20 days after delivery of
the notice of the failed contract and the purchase price (exclusive of accrued
interest) may not exceed the amount of funds reserved for the purchase of the
Failed Bonds. The Replacement Bonds (i) must be tax-exempt bonds issued by
the State of Kansas or its political subdivisions, (ii) must have a fixed
maturity date of at least 10 years, (iii) must be purchased at a price that
results in a yield to maturity and in a current return, in each case as of the
Date of Deposit, at least equal to that of the Failed Bonds, (iv) shall not be
"when, as and if issued" bonds and (v) must be rated "BBB-" or better by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("Standard &
Poor's" or "S&P") or "Baa3" or better by Moody's Investors Service, Inc.
("Moody's"). Whenever a Replacement Bond has been acquired for the Trust, the
Trustee shall, within five days thereafter, notify all Certificateholders of
the Trust of the acquisition of the Replacement Bonds and shall, on the next
monthly distribution date which is more than 30 days thereafter, make a pro
rata distribution of the amount, if any, by which the cost to the Trust of the
Failed Bond exceeded the cost of the Replacement Bond plus accrued interest.
Once the original corpus of the Trust is acquired, the Trustee will have no
power to vary the investment of the Trust, i.e., the Trust will have no
managerial power to take advantage of market variations to improve a
Certificateholder's investment.
If the right to limited substitution described in the preceding paragraph
shall not be utilized to acquire Replacement Bonds in the event of a failed
contract, the Sponsor will refund the sales charge attributable to such Failed
Bonds to all Certificateholders of the Trust and distribute the principal and
accrued interest (at the coupon rate of such Failed Bonds to the date the
Failed Bonds are removed from the Trust) attributable to such Failed Bonds not
more than 30 days after such removal or such earlier time as the Trustee in
its sole discretion deems to be in the interest of the Certificateholders. In
the event a Replacement Bond should not be acquired by the Trust, the
estimated net annual interest income per Unit for the Trust would be reduced
and the Estimated Current Return and Estimated Long-Term Return thereon might
9
be lowered. In addition, Certificateholders should be aware that they may not
be able at the time of receipt of such principal to reinvest such proceeds in
other securities at a yield equal to or in excess of the yield which such
proceeds were earning to Certificateholders in the Trust.
GENERAL. Certain of the Bonds in the Trust are subject to redemption prior
to their stated maturity date pursuant to sinking fund provisions, call
provisions or extraordinary optional or mandatory redemption provisions. A
sinking fund is a reserve fund accumulated over a period of time for
retirement of debt. A callable debt obligation is one which is subject to
redemption or refunding prior to maturity at the option of the issuer. A
refunding is a method by which a debt obligation is redeemed, at or before
maturity, by the proceeds of a new debt obligation. In general, call
provisions are more likely to be exercised when the offering side valuation is
at a premium over par than when it is at a discount from par. The portfolio
contains a listing of the sinking fund and call provisions, if any, with
respect to each of the debt obligations. Extraordinary optional redemptions
and mandatory redemptions result from the happening of certain events.
Generally, events that may permit the extraordinary optional redemption of
Bonds or may require the mandatory redemption of Bonds include, among others:
a final determination that the interest on the Bonds is taxable; the
substantial damage or destruction by fire or other casualty of the project for
which the proceeds of the Bonds were used; an exercise by a local, state or
Federal governmental unit of its power of eminent domain to take all or
substantially all of the project for which the proceeds of the Bonds were
used; changes in the economic availability of raw materials, operating
supplies or facilities or technological or other changes which render the
operation of the project for which the proceeds of the Bonds were used
uneconomic; changes in law or an administrative or judicial decree which
renders the performance of the agreement under which the proceeds of the Bonds
were made available to finance the project impossible or which creates
unreasonable burdens or which imposes excessive liabilities, such as taxes,
not imposed on the date the Bonds are issued on the issuer of the Bonds or the
user of the proceeds of the Bonds; an administrative or judicial decree
requires the cessation of a substantial part of the operations of the project
financed with the proceeds of the Bonds; an overestimate of the costs of the
project to be financed with the proceeds of the Bonds resulting in excess
proceeds of the Bonds which may be applied to redeem Bonds; or an
underestimate of a source of funds securing the Bonds resulting in excess
funds which may be applied to redeem Bonds. See "Trust Portfolio" and
footnote (3) in "Notes to Trust Portfolio." See also "Portfolio" above for
possible redemptions prior to initial stated call dates. Certain of the Bonds
in the Trust may have been purchased by the Trust at premiums over the par
value (principal amount) of such Bonds (see "Trust Portfolio"). To the extent
Certificateholders acquire their Units at a time Bonds are valued at a premium
over such par value and such Bonds are subsequently redeemed or prepaid at par
or for less than such valuations, Certificateholders will likely sustain
losses in connection with such redemptions or prepayments. For the tax
effects of Bond redemptions generally, see "Tax Status (Federal, State,
Capital Gains)."
To the best knowledge of the Sponsor there is no litigation pending as of
the Date of Deposit in respect of any Bonds which might reasonably be expected
to have a material adverse effect upon the Trust. At any time after the Date
of Deposit, litigation may be initiated on a variety of grounds with respect
to Bonds in the Trust. Such litigation, as, for example, suits challenging
the issuance of pollution control revenue bonds under environmental protection
statutes, may affect the validity of such Bonds or the tax-free nature of the
interest thereon. While the outcome of litigation of such nature can never be
entirely predicted, the Trust has received opinions of bond counsel to the
issuing authorities of each Bond on the date of issuance to the effect that
such Bonds have been validly issued and that the interest thereon is exempt
from Federal income tax. In addition, other factors may arise from time to
time which potentially may impair the ability of issuers to meet obligations
undertaken with respect to the Bonds.
10
OBJECTIVES OF THE TRUST
The Trust has been formed to provide residents of the State of Kansas
interest income which is exempt from Federal and Kansas state income taxes and
from local Kansas intangible personal property taxes. In addition, the Trust
also has objectives which include conservation of capital and liquidity of
investment. There is no assurance that the Trust's objectives will be met.
In selecting Bonds for the Trust, the following facts, among others, were
considered by the Sponsor: (a) either the Standard & Poor's rating of the
Bonds was in no case less than "BBB-" or the Moody's Investors Service, Inc.
rating of the Bonds was in no case less than "Baa3" including provisional or
conditional ratings, respectively, or, if not rated, the Bonds had, in the
opinion of the Sponsor, credit characteristics sufficiently similar to the
credit characteristics of interest-bearing tax-exempt obligations that were so
rated as to be acceptable for acquisition by the Trust (see "Description of
Bond Ratings") and (b) the prices of the Bonds relative to other bonds of
comparable quality and maturity. Medium-quality Bonds (rated BBB or A by S&P
or Baa or A by Moody's) are obligations of issuers that are considered to
possess adequate, but not outstanding, capacities to service the obligations.
Investment in medium-quality debt securities involves greater investment risk,
including the possibility of issuer default or bankruptcy, than investment in
higher-quality debt securities. An economic downturn could severely disrupt
this market and adversely affect the value of outstanding bonds and the
ability of the issuers to repay principal and interest. During a period of
adverse economic changes, including a period of rising interest rates, issuers
of such bonds may experience difficulty in servicing their principal and
interest payment obligations. Medium quality debt securities tend to be less
marketable than higher-quality debt securities because the market for them is
less broad. During periods of thin trading in these markets, the spread
between bid and asked prices is likely to increase significantly, and the
Trust may have greater difficulty selling the medium-quality debt securities
in its portfolio. Subsequent to the Date of Deposit, a Bond may cease to be
rated or its rating may be reduced below the minimum required as of the Date
of Deposit. Neither event requires elimination of such Bond from a portfolio
but may be considered in the Sponsor's determination as to whether or not to
direct the Trustee to dispose of the Bond (see "Trustee Information").
The Trust consists of a portfolio of fixed rate, long-term debt
obligations. An investment in the Trust should be made with an understanding
of the risks associated with an investment in such obligations. Fluctuations
in interest rates may cause corresponding fluctuations in the value of the
Bonds in the portfolio. The Sponsor cannot predict whether the value of the
Bonds in the portfolio will increase or decrease.
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN
As of the business day prior to the Date of Deposit, the Estimated Current
Return and the Estimated Long-Term Return were as set forth in "Summary of
Essential Financial Information." Estimated Current Return is calculated by
dividing the estimated net annual interest income per Unit by the Public
Offering Price. The estimated net annual interest income per Unit will vary
with changes in fees and expenses of the Trustee and the Evaluator and with
the principal prepayment, redemption, maturity, exchange or sale of Securities
while the Public Offering Price will vary with changes in the offering price
of the underlying Securities; therefore, there is no assurance that the
present Estimated Current Return will be realized in the future. Estimated
Long-Term Return is calculated using a formula which (1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
11
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and (2) takes into account the expenses and sales
charge associated with the Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Return will be realized
in the future. Estimated Current Return and Estimated Long-Term Return are
expected to differ because the calculation of Estimated Long-Term Return
reflects the estimated date and amount of principal returned while the
Estimated Current Return calculation includes only net annual interest income
and Public Offering Price. Neither rate reflects the true return to
Certificateholders which is lower because neither includes the effect of the
delay in the first payment to Certificateholders.
In order to acquire certain of the Bonds contracted for by the Sponsor for
deposit in the Trust, it may be necessary for the Sponsor or Trustee to pay on
the settlement dates for delivery of such Bonds amounts covering accrued
interest on such Bonds which exceed (1) the amounts paid by Certificateholders
and (2) the amounts which will be made available through cash furnished by the
Sponsor on the Date of Deposit, which amount of cash may exceed the interest
which would accrue to the First Settlement Date. The Trustee has agreed to
pay any amounts necessary to cover any such excess and will be reimbursed
therefor, without interest, when funds become available from interest payments
on the particular Bonds with respect to which such payments may have been
made.
PUBLIC OFFERING INFORMATION
Units in the Trust are offered at the Public Offering Price which during
the initial public offering period is based on the offering prices of the
Bonds in the Trust plus a sales charge of 4.90% of the Public Offering Price
(equivalent to 5.152% of the aggregate offering price of the Bonds in the
portfolio) and which in the secondary market is based on the bid prices of the
Bonds in the portfolio and includes a sales charge of 5.50% of the Public
Offering Price (equivalent to 5.82% of the aggregate bid price of the Bonds in
the portfolio) plus accrued and undistributed interest to the settlement date.
The initial public offering period shall terminate upon the sale to the public
of all the Units in the Trust. Upon termination of the initial offering
period, any unsold Units and any Units repurchased in the secondary market may
be offered by this Prospectus at the secondary Public Offering Price in the
manner described herein. The sales charge applicable to quantity purchases is
reduced during the initial public offering period on a graduated basis to any
person acquiring at least 150 Units as follows:
<TABLE>
<CAPTION>
DOLLAR AMOUNT OF
SALES CHARGE REDUCTION
NUMBER OF UNITS PURCHASED PER UNIT
<S> <C>
150-249 Units $ 2.50
250-499 Units 5.00
500-799 Units 7.75
800 or more Units 10.00
</TABLE>
Any reduced sales charge shall be the responsibility of the selling dealer.
The reduced sales charge will apply on all purchases of Units in the Trust
made by the same person on any one day from any one dealer. Units purchased
in the name of the spouse of a purchaser or in the name of a child of any such
purchaser under 21 years of age will be deemed for the purposes of calculating
the applicable sales charge to be a single purchase by the purchaser. The
reduced sales charges will also be applicable to a trustee or other fiduciary
purchasing Units for a single trust estate or single fiduciary account.
12
Although payment is normally made three business days following the order
for purchase, payment may be made prior thereto. A person will become the
owner of Units on the date of settlement provided payment has been received.
Cash, if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934.
During the initial offering period, Units will be distributed to the public
through the Underwriters and through certain dealers. Underwriters will
acquire Units from the Sponsor at the concessions set forth under
"Underwriting." Dealers will be allowed a concession during the initial
offering period equal to 3.25% of the Public Offering Price. In the secondary
market such concession will amount to 4.5% of the Public Offering Price.
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge paid by their
customers is retained by or remitted to the banks in an amount allowing a
concession equal to that shown above for dealers. Under the Glass-Steagall
Act, banks are prohibited from underwriting Trust Units; however, the Glass-
Steagall Act does permit certain agency transactions and the banking
regulators have indicated that these particular agency transactions are
permitted under such Act.
To facilitate the handling of transactions during the initial public
offering period, sales of Units shall normally be limited to transactions
involving a minimum of five Units. Further purchases may be made in multiples
of one Unit. The minimum purchase in the secondary market will be one Unit.
The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units and to change the amount of the concession to
dealers, set forth below, from time to time.
ACCRUED INTEREST
Accrued interest which is the accumulation of unpaid interest on a bond
from the last day on which interest thereon was paid. Interest on Bonds in
the Trust is paid to the Trustee either monthly or semi-annually. However,
interest on the Bonds in the Trust is accounted for daily on an accrual basis.
Because of this, the Trust always has an amount of interest earned but not yet
collected by the Trustee because of coupons that are not yet due. For this
reason, with respect to sales settling subsequent to the First Settlement
Date, the Public Offering Price of Units will have added to it the
proportionate share of accrued and undistributed interest to the date of
settlement. Certificateholders will receive on the next distribution date of
the Trust the amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would otherwise
have to be paid in addition to the Public Offering Price in the sale of Units
to the public, the Trustee will advance the amount of accrued interest as of
the First Settlement Date and the same will be distributed to the Sponsor, as
the Certificateholder of record on such date. Consequently, the amount of
accrued interest to be added to the Public Offering Price of Units will
include only accrued interest arising after the First Settlement Date of the
Trust, less any distributions from the Interest Account subsequent to this
First Settlement Date. Since the First Settlement Date is the date of
settlement for anyone ordering Units on the Date of Deposit, no accrued
interest will be added to the Public Offering Price of Units ordered on the
Date of Deposit.
13
Because of the varying interest payment dates of the Bonds, accrued
interest at any point in time will be greater than the amount of interest
actually received by the Trust and distributed to Certificateholders.
Therefore, there will always remain an item of accrued interest that is added
to the value of the Units. If a Certificateholder sells or redeems all or a
portion of his Units, he will be entitled to receive his proportionate share
of the accrued interest from the purchaser of his Units. Since the Trustee
has use of the funds held in the Interest Account for distributions to
Certificateholders and since such Account is non-interest-bearing to
Certificateholders, the Trustee benefits thereby.
REDEMPTION AND REPURCHASE OF UNITS
Certificateholders may redeem all or a portion of their Units by tender to
the Trustee, at its corporate office in Kansas City, Missouri, of the
certificates representing Units to be redeemed, duly endorsed or accompanied
by proper instruments of transfer with signature guaranteed. In order to
effect a redemption of Units, Certificateholders must tender their
certificates to the Trustee or provide satisfactory indemnity required in
connection with lost, stolen or destroyed certificates. No redemption fee
will be charged. On the third business day following such tender, the
Certificateholder will be entitled to receive in cash for each Unit tendered
an amount equal to the redemption price per Unit as next computed after
receipt by the Trustee of such tender of Units as determined by the bid price
of the Bonds in the Trust on the date of tender (the "Redemption Price") plus
accrued interest to, but not including, the date of redemption. The price
received upon redemption may be more or less than the amount paid by the
Certificateholder depending on the value of the Bonds on the date of tender.
The value of the Bonds will fluctuate with market and credit conditions,
including any changes in interest rate levels.
Accrued interest paid on redemption shall be withdrawn from the Interest
Account, or if the balance therein is insufficient, from the Principal
Account. All other amounts paid on redemption shall be withdrawn from the
Principal Account. In addition, the Trustee is empowered, with certain
recommendations allowed by the Sponsor, to sell Bonds in the portfolio of the
Trust to make funds available for redemption. Units redeemed shall be
cancelled and not be available for reissuance.
The recognized date of tender is deemed to be the date on which Units are
received in proper form by the Trustee prior to 3:00 p.m. Central time. Units
received by the Trustee after 3:00 p.m. will be deemed to have their
recognized date of tender on the next business day on which the New York Stock
Exchange is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the Redemption Price
computed on that date (see "Evaluation of the Trust").
To the extent that Bonds in the portfolio of the Trust are sold to meet
redemptions, the size and diversity of the Trust will be reduced. Such sales
may occur at a time when Bonds might not otherwise be sold which may result in
lower prices received on the Bonds than might be realized under normal trading
conditions.
Under regulations issued by the Internal Revenue Service, the Trustee will
be required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming
Certificateholder's tax identification number in the manner required by such
regulations. Any amount so withheld is transmitted to the Internal Revenue
Service and may be recovered by the Certificateholder only when filing his or
her tax return. Under normal circumstances the Trustee obtains the
Certificateholder's tax identification number from the selling broker at the
14
time the certificate is issued, and this number is printed on the certificate
and on distribution statements. If a Certificateholder's tax identification
number does not appear on the certificate or statements, or if it is
incorrect, the Certificateholder should contact the Trustee before presenting
a certificate for redemption to determine what action, if any, is required to
avoid this back-up withholding.
The right of redemption may be suspended and payment postponed for any
period during which the New York Stock Exchange is closed, other than for
customary weekend and holiday closings, or during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the Bonds
is not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit.
The Trustee shall notify the Sponsor of any tender of Units for redemption.
If the Sponsor's repurchase price in the secondary market at that time equals
or exceeds the redemption price, it may repurchase such Units by notifying the
Trustee before the close of business on the second succeeding business day and
by making payment therefor to the tendering Certificateholder not later than
the day on which payment would otherwise have been made by the Trustee. The
secondary market Public Offering Price of any Units thus acquired by the
Sponsor will be in accord with the procedure described in the then currently
effective prospectus relating to such Units. Units held by the Sponsor may be
tendered to the Trustee for redemption. Any profit or loss resulting from the
resale or redemption of such Units will belong to the Sponsor.
Although not obligated to do so, the Sponsor intends to maintain a market
for the Units offered hereby and to offer continuously to purchase such Units
at prices, subject to change at any time, based upon the aggregate bid prices
of the Bonds in the portfolio plus interest accrued to the date of settlement
plus any principal cash on hand, less any amounts representing taxes or other
governmental charges payable out of the Trust and less any accrued Trust
expenses. If the supply of Units exceeds demand or if some other business
reason warrants it, the Sponsor may either discontinue all purchases of Units
or discontinue purchases of Units at such prices. In the event that a market
is not maintained for the Units and the Certificateholder cannot find another
purchaser, a Certificateholder desiring to dispose of his Units may be able to
dispose of such Units only by tendering them to the Trustee for redemption at
the redemption price, which is based upon the aggregate bid price of the Bonds
in the portfolio. The aggregate bid prices of the underlying Bonds in the
Trust are expected to be less than the related aggregate offering prices. A
Certificateholder who wishes to dispose of his Units should inquire of his
broker as to current market prices in order to determine whether there is in
existence any price in excess of the redemption price and, if so, the amount
thereof.
DISTRIBUTION OF INTEREST AND PRINCIPAL
Interest received by the Trust, including that part of the proceeds from
the disposition of Bonds, if any, which represents accrued interest, is
credited by the Trustee to the Interest Account. Any other receipts are
credited to the Principal Account. Interest received by the Trust will be
distributed on or shortly after the first day of each month on a pro rata
basis to Certificateholders of record as of the preceding record date (which
is the fifteenth day of the month next preceding the distribution). All
distributions will be net of applicable expenses. The pro rata share of cash
in the Principal Account will be computed on the fifteenth day of each month
and will be distributed to the Certificateholders as of the first day of the
next succeeding month. Such principal distribution may be combined with any
interest distribution due to the Certificateholder at that time. Proceeds
received from the disposition of any of the Bonds in the portfolio of the
15
Trust after each record date and prior to the following distribution date will
be held in the Principal Account and not distributed until the next
distribution date. The Trustee is not required to pay interest on funds held
in the Principal or Interest Accounts (but may itself earn interest thereon
and therefore benefit from the use of such funds) nor to make a distribution
from the Principal Account unless the amount available for distribution shall
equal at least $1.00 per Unit.
The distribution to the Certificateholders as of each record date after the
First Settlement Date will be made on the following distribution date or
shortly thereafter and shall consist of an amount substantially equal to the
Certificateholder's pro rata share of the estimated annual income after
deducting estimated expenses. Because interest payments are not received by
the Trust at a constant rate throughout the year, such interest distribution
may be more or less than the amount credited to the Interest Account as of the
record date. For the purpose of minimizing fluctuations in the distributions
from the Interest Account, the Trustee is authorized to advance such amounts
as may be necessary to provide interest distributions of approximately equal
amounts. The Trustee shall be reimbursed, without interest, for any such
advances from funds in the Interest Account on the ensuing record date. A
person who purchases Units will commence receiving distributions only after
such person becomes a record owner. Notification to the Trustee of the
transfer of Units is the responsibility of the purchaser, but in the normal
course of business such notice is provided by the selling broker/dealer.
As of the fifteenth day of each month, the Trustee will deduct from the
Interest Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the Trust (see
"Expenses of the Trust"). The Trustee may also withdraw from said accounts an
amount, if deemed necessary, to fund a reserve for any governmental charges or
anticipated Trust expenses which may be payable out of the Trust. Amounts so
withdrawn will not be considered a part of the Trust's assets until such time
as the Trustee shall return all or part of the amount withdrawn to the
appropriate accounts. In addition, the Trustee may withdraw from the Interest
and Principal Accounts such amounts as may be necessary to cover purchases of
Replacement Bonds and redemptions of Units by the Trustee (see "Description of
Trust Portfolio" and "Redemption and Repurchase of Units").
Funds which are available for future distributions, redemptions and payment
of expenses are held in accounts which are non-interest bearing to
Certificateholders and are available for use by the Trustee pursuant to normal
banking procedures.
DISTRIBUTION REINVESTMENT OPTION
The Sponsor has entered into arrangements with Ranson Managed Portfolios _
The Kansas Municipal Fund (the "Kansas Municipal Fund") and Ranson Managed
Portfolios - The Kansas Insured Municipal Fund - Limited Maturity (the "Kansas
Insured Municipal Fund") which permit any Unitholder of the Trust to elect to
have each distribution of interest income or principal, including capital
gains, on his Units automatically reinvested in shares of the Kansas Municipal
Fund or the Kansas Insured Municipal Fund, respectively. The investment
objective of the Kansas Municipal Fund and the Kansas Insured Municipal Fund
is to provide its shareholders with a high level of current income exempt from
both federal income tax and Kansas income tax as is consistent with
preservation of capital. The objectives and policies of the Kansas Municipal
Fund and the Kansas Insured Municipal Fund are presented in more detail in the
Kansas Municipal Fund and the Kansas Insured Municipal Fund prospectuses,
respectively. Unitholders should contact the broker from whom they obtained
this Prospectus to obtain a current prospectus for the Kansas Municipal Fund
16
and the Kansas Insured Municipal Fund, or they may obtain a current prospectus
by contacting Ranson Capital Corporation at (800) 345-2363.
Unitholders will be able to reinvest their distributions of interest income
or principal in the Kansas Municipal Fund and the Kansas Insured Municipal
Fund with no sales charge and no minimum investment.
A Unitholder may at any time, by so notifying the Trustee in writing, elect
to terminate his participation in the Distribution Reinvestment Option and
receive future distributions on his Units in cash. There will be no charge or
other penalty for such termination. The Sponsor, the Kansas Municipal Fund
and the Kansas Insured Municipal Fund each have the right to terminate the
Distribution Reinvestment Option, in whole or in part.
TAX STATUS (FEDERAL, STATE, CAPITAL GAINS)
At the respective times of issuance of the Bonds, opinions relating to the
validity thereof, to the exemption of interest thereon from Federal and Kansas
income taxation and to the exemption from local Kansas intangible personal
property taxes were rendered by bond counsel to the respective issuing
authorities. Gain realized on the sale or redemption of the Bonds by the
Trustee or of a Unit by a Certificateholder is, however, includable in gross
income for Federal and Kansas state income tax purposes. It should be noted
in this connection that such gain does not include any amounts received in
respect of accrued interest or earned original issue discount, if any. It
should be noted that under recently enacted legislation described below, that
subjects accretion of market discount on tax-exempt bonds to taxation as
ordinary income, gain realized on the sale or redemption of Bonds by the
Trustee or of Units by a Certificateholder that would have been treated as
capital gain under prior law is treated as ordinary income to the extent it is
attributable to accretion of market discount. Market discount can arise based
on the price the Trust pays for Bonds or the price a Certificateholder pays
for his Units. Neither the Sponsor nor its counsel have made any special
review for the Trust of the proceedings relating to the issuance of the Bonds
or of the bases for such opinions.
In the opinion of Chapman and Cutler, counsel for the Sponsor, under
existing law:
1) the Trust is not an association taxable as a corporation for Federal
income tax purposes and interest and accrued original issue discount on the
Bonds which is excludable from gross income under the Internal Revenue Code
of 1986 (the "Code") will retain its status when distributed to
Certificateholders. A Certificateholder's share of the interest on certain
Bonds in the Trust will be included as an item of tax preference for both
individuals and corporations subject to the alternative minimum tax ("AMT
Bonds"). In the case of certain corporations owning Units, interest and
accrued original issue discount with respect to Bonds other than AMT Bonds
held by the Trust may be subject to the alternative minimum tax, an
additional tax on branches of foreign corporations and the environmental
tax (the "Superfund Tax").
2) exemption of interest and accrued original issue discount on any Bonds
for Federal income tax purposes does not necessarily result in tax
exemption under the laws of the several states as such laws vary with
respect to the taxation of such bonds and in many states all or a part of
such interest and accrued original issue discount may be subject to tax;
and
3) each Certificateholder is considered to be the owner of a pro rata
portion of the Trust under subpart E, subchapter J of Chapter 1 of the Code
and will have a taxable event when the Trust disposes of a Bond or when the
17
Certificateholder redeems or sells Units. Gain or loss upon the sale or
redemption of units is measured by comparing the proceeds of such sale or
redemption with the adjusted basis of the Units. If the Trustee disposes
of Bonds (whether by sale, payment on maturity, redemption or otherwise),
gain or loss is recognized to the Certificateholder. The amount of any
such gain or loss is measured by comparing the Certificateholder's pro rata
share of the total proceeds from such disposition with the
Certificateholder's basis for his or her fractional interest in the asset
disposed of. In the case of a Certificateholder who purchases Units, such
basis (before adjustment for earned original issue discount and amortized
bond premium, if any) is determined by apportioning the cost of the Units
among each of the Trust assets ratably according to value as of the date of
acquisition of the Units. The basis of each Unit and of each Bond which
was issued with original issue discount must be increased by the amount of
accrued original issue discount and the basis of each Unit and of each Bond
which was purchased by the Trust at a premium must be reduced by the annual
amortization of Bond premium. The tax cost reduction requirements of said
Code relating to amortization of bond premium may, under some
circumstances, result in the Certificateholder realizing a taxable gain
when his Units are sold or redeemed for an amount equal to his original
cost. A Certificateholder will realize a taxable gain when his Units are
sold or redeemed for an amount greater than his adjusted basis in his Units
at the time of such sale or redemption.
Sections 1288 and 1272 of the Code provide a complex set of rules governing
the accrual of original issue discount. These rules provide that original
issue discount accrues either on the basis of a constant compound interest
rate or ratably over the term of the Bond, depending on the date the Bond was
issued. In addition, special rules apply if the purchase price of a Bond
exceeds the original issue price plus the amount of original issue discount
which accrued to prior owners. The application of these rules will also vary
depending on the value of the Bond on the date a Certificateholder acquires
his Units and the price the Certificateholder pays for his Units. Investors
with questions regarding these Code sections should consult with their tax
advisers.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-
exempt bonds to the market discount rules of the Code effective for bonds
purchased after April 30, 1993. In general, market discount is the amount (if
any) by which the stated redemption price at maturity exceeds an Investor's
purchase price (except to the extent that such difference, if any, is
attributable to original issue discount not yet accrued) subject to a
statutory de minimis rule. Under the Tax Act, accretion of market discount is
taxable as ordinary income; under prior law the accretion had been treated as
capital gain. Market discount that accretes while the Trust holds a Bond
would be recognized as ordinary income by the Certificateholders when
principal payments are received on the Bond, upon sale or at redemption
(including early redemption) or upon the sale or redemption of the Units,
unless a Certificateholder elects to include market discount in taxable income
as it accrues. The market discount rules are complex and Certificateholders
should consult their tax advisers regarding these rules and their application.
Interest on certain "specified private activity bonds" held by the Trust
will be treated as an item of tax preference for purposes of computing the
alternative minimum tax of all Certificateholders of the Trust, including
individuals. As a result, such interest income may be subject to the
alternative minimum tax. The Trust will annually supply Certificateholders
with information regarding the amount of Trust income attributable to those
"specified private activity bonds" held by the Trust that give rise to a
specific item of tax preference. Certificateholders should consult their tax
adviser regarding the potential application of the alternative minimum tax and
the impact of a portion of the Trust's income being characterized as a tax
preference.
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For purposes of computing the alternative minimum tax for individuals and
corporations and the Superfund Tax for corporations, interest on certain
private activity bonds (which includes most industrial and housing revenue
bonds) issued on or after August 8, 1986 such as the AMT Bonds, is included as
an item of tax preference.
In the case of corporations, for taxable years beginning after December 31,
1986, the alternative minimum tax and the Superfund Tax depend upon the
corporation's alternative minimum taxable income, which is the corporation's
taxable income with certain adjustments. One of the adjustment items used in
computing the alternative minimum taxable income and the Superfund Tax of a
corporation (other than an S Corporation, Regulated Investment Company, Real
Estate Investment Trust, or REMIC) is an amount equal to 75% of the excess of
such corporation's "adjusted current earnings" over an amount equal to its
alternative minimum taxable income (before such adjustment item and the
alternative tax net operating loss deduction). "Adjusted current earnings"
includes all tax-exempt interest, including interest on the Bonds in the
Trust. Corporate Certificateholders are urged to consult their tax advisers
with respect to the particular tax consequences to them, including the
corporate alternative minimum tax, Superfund Tax and the branch profits tax
imposed by Section 884 of the Code.
The Code provides that interest on indebtedness incurred or continued to
purchase or carry obligations, the interest on which is wholly exempt from
Federal income taxes, is not deductible. Because each Certificateholder is
treated for Federal income tax purposes as the owner of a pro rata share of
the Bonds owned by the Trust, interest on borrowed funds used to purchase or
carry Units of the Trust will not be deductible for Federal income tax
purposes. Under rules used by the Internal Revenue Service for determining
when borrowed funds are considered used for the purpose of purchasing or
carrying particular assets, the purchase of Units may be considered to have
been made with borrowed funds even though the borrowed funds are not directly
traceable to the purchase of Units. However, these rules generally do not
apply to interest paid on indebtedness incurred for expenditures of a personal
nature such as a mortgage incurred to purchase or improve a personal
residence. Federally tax-exempt income, including income on Units of the
Trust, will be taken into consideration in computing the portion, if any, of
social security benefits received that will be included in a taxpayer's gross
income subject to Federal income tax. It should be noted that under the Tax
Act, the proportion of social security benefits subject to inclusion in
taxable income has been raised for taxable years starting in 1994. Under
Section 265 of the Code, certain financial institutions that acquire Units
would generally not be able to deduct any of the interest expense attributable
to ownership of such Units. Investors with questions regarding these issues
should consult with their tax advisers.
For taxpayers other than corporations, net capital gains are subject to a
maximum rate of 28 percent. However, it should be noted that legislative
proposals are made from time to time that affect tax rates and could affect
relative differences at which ordinary income and capital gains are taxed.
Under the Code, taxpayers must disclose to the Internal Revenue Service the
amount of tax-exempt interest earned during the year.
In the case of certain of the Bonds in the Trust, the opinions of bond
counsel indicate that interest on such securities received by a "substantial
user" of the facilities being financed with the proceeds of these securities,
or persons related thereto, for periods while such securities are held by such
a user or related person, will not be excludable from Federal gross income,
although interest on such securities received by others would be excludable
19
from Federal gross income. "Substantial user" and "related person" are
defined under U.S. Treasury Regulations. Any person who believes that he or
she may be a "substantial user" or a "related person" as so defined should
contact his or her tax adviser.
In the opinion of Chapman and Cutler, counsel for the Sponsor, assuming
interest on the Bonds is excludable from gross income under Section 103 of the
Internal Revenue Code of 1986 as amended, under existing Kansas law;
The Trust is not an association taxable as a corporation for Kansas income
tax purposes;
Each Certificateholder of the Trust will be treated as the owner of a pro
rata portion of the Trust, and the income and deductions of the Trust will
therefore be treated as income of the Certificateholder under Kansas law;
Interest on Bonds issued after December 31, 1987 by the State of Kansas or
any of its political subdivisions will be exempt from income taxation imposed
on individuals, corporations and fiduciaries (other than insurance companies,
banks, trust companies or savings and loan associations) however, interest on
Bonds issued prior to January 1, 1988 by the State of Kansas or any of its
political subdivisions will not be exempt from income taxation imposed on
individuals, corporations and fiduciaries (other than insurance companies,
banks, trust companies or savings and loan associations) unless the laws of
the State of Kansas authorizing the issuance of such Bonds specifically exempt
the interest on the Bonds from income taxation by the State of Kansas;
Interest on Bonds issued by the State of Kansas or any of its political
subdivisions will be subject to the tax imposed on banks, trust companies and
savings and loan associations under Article 11, Chapter 79 of the Kansas
statutes;
Interest on Bonds issued by the State of Kansas or any of its political
subdivisions will be subject to the tax imposed on insurance companies under
Article 40, Chapter 28 of the Kansas statutes unless the laws of the State of
Kansas authorizing the issuance of such Bonds specifically exempt the interest
on the Bonds from income taxation by the State of Kansas; interest on the
Bonds which is exempt from Kansas income taxation when received by the Trust
will continue to be exempt when distributed to a Certificateholder (other than
a bank, trust company or savings and loan association);
Each Certificateholder of the Trust will recognize gain or loss for Kansas
income tax purposes if the Trustee disposes of a Bond (whether by sale,
exchange, payment on maturity, retirement or otherwise) or if the
Certificateholder redeems or sells Units of the Trust to the extent that such
transaction results in a recognized gain or loss for federal income tax
purposes;
Interest received by the Trust on the Bonds is exempt from intangibles
taxation imposed by any counties, cities and townships pursuant to present
Kansas law; and
No opinion is expressed regarding whether the gross earnings derived from
the Units is subject to intangibles taxation imposed by counties, cities and
townships pursuant to present Kansas law.
20
In addition, in the opinion of Chapman and Cutler, under Missouri law, as
presently enacted and construed:
(i) The Trust is not an association taxable as a corporation for Missouri
income tax purposes.
(ii) The Certificateholders of the Trust will be treated as the owners of a
pro rata portion of the Trust and the income of The Trust will therefore be
treated as income of the Certificateholders under Missouri law.
(iii) The Trust will not be subject to the Kansas City, Missouri
Earnings and Profits Tax and each Certificateholder's share of The Trust will
not generally be subject to the Kansas City, Missouri Earnings and Profits Tax
or the City of St. Louis Earnings Tax (except in the case of certain
Certificateholders, including corporations, otherwise subject to the St. Louis
City Earnings Tax).
All statements of law in the Prospectus concerning exemption from Federal,
state or other taxes are the opinion of counsel and are to be so construed.
EXPENSES OF THE TRUST
The Sponsor has borne the costs of establishing the Trust, including the
cost of initial preparation, printing and execution of the Indenture and the
certificates, legal and accounting expenses, advertising expenses, selling
expenses, expenses of the Trustee, initial fees for evaluations and other out-
of-pocket expenses, at no cost to the Trust. The Sponsor will not receive any
fees in connection with activities relating to the Trust. However, for
regularly evaluating the portfolio of the Trust, the Evaluator (which is the
Sponsor) will receive that minimum annual fee set forth under "Summary of
Essential Financial Information" which fee is based on the largest aggregate
amount of Bonds in the Trust at any time during such period. This fee may
exceed the actual costs of providing such evaluation services for this Trust,
but at no time will the total amount received for evaluation services rendered
to unit investment trust of which Ranson Capital Corporation is the Sponsor in
any calendar year exceed the aggregate cost to the Sponsor of supplying such
services in such year.
The Trustee will receive for ordinary services an annual fee from the Trust
set forth under "Summary of Essential Financial Information" which fee is
based on the largest aggregate amount of Bonds in the Trust at any time during
such period. Both the Trustee's fee and the evaluation fee paid to the
Sponsor may be adjusted without prior approval from Certificateholders,
provided that all adjustments upward will not exceed the cumulative percentage
increase of the United States Department of Labor's Consumer Price Index or,
if such index is no longer published, in a comparable index. In addition, the
Trustee's fee may be periodically adjusted in response to fluctuations in
short-term interest rates (reflecting the cost to the Trustee of advancing
funds to the Trust to meet scheduled distributions). Since the Trustee has
the use of the funds being held in the Principal and Interest Accounts for
future distributions, payment of expenses and redemptions and since such
Accounts are non-interest bearing to Certificateholders, the Trustee benefits
thereby. Part of the Trustee's compensation for its services to the Trust is
expected to result from the use of these funds. For a discussion of the
services rendered by the Trustee pursuant to its obligations under the
Indenture, see "Trustee Information" and "Other Rights of Certificateholders."
The following is a summary of expenses of the Trust which, when owed to the
Trustee, are secured by a lien on the assets of the Trust: 1) the expenses and
costs of any action undertaken by the Trustee to protect the Trust and the
rights and interests of the Certificateholders; 2) any taxes and other
governmental charges upon the Bonds or any part of the Trust (no such taxes or
charges are currently being levied, or, to the knowledge of the Sponsor,
contemplated); 3) amounts payable to the Trustee as fees for ordinary
21
recurring services and for extraordinary non-recurring services rendered
pursuant to the Indenture and all disbursements and expenses including counsel
fees (including fees of counsel which the Trustee may retain) and auditing
fees sustained or incurred by the Trustee in connection therewith; and 4) any
losses or liabilities accruing to the Trustee without negligence, bad faith or
willful misconduct on its part. The Trustee is empowered to sell Bonds in
order to pay these amounts if funds are not available in the Interest and
Principal Accounts. Costs of disbursement (including postage, checks and
handling) of interest, principal and redemption distributions will be paid by
the Trustee and will not be charged to the Trust.
EVALUATION OF THE TRUST
As of the opening of business on the Date of Deposit, the price of the
Units was determined on the basis of an initial evaluation of the Bonds in the
Trust prepared by Stern Brothers & Co., a firm regularly engaged in the
business of evaluating, quoting or appraising comparable securities. After
the opening of business on the Date of Deposit and during the period of
initial public offering, the Evaluator, Ranson Capital Corporation, will
appraise or cause to be appraised daily the value of the underlying Bonds as
of 3:00 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
appraisal. Such Public Offering Price will be effective for all orders
received at or prior to 3:00 P.M. Central time on each such day. Orders
received by the Trustee or Sponsor 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. 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 Redemption Price per Unit on a daily basis on days the New York
Stock Exchange is open (and on any other days on which Sponsor secondary
market transactions or redemptions occur). Each evaluation of the Trust has
been and will be determined on the basis of cash on hand in the Trust or money
in the process of being collected, the value of the Bonds in the portfolio of
the Trust based on the bid prices of the Bonds and interest accrued thereon
not subject to collection less any taxes or governmental charges payable, any
accrued expenses of the Trust and any cash held for distribution to
Certificateholders. The result of that computation is then divided by the
number of Units outstanding as of the date thereof to determine the per Unit
value of the Trust.
The Evaluator may determine the value of the Bonds in the portfolio of the
Trust (1) on the basis of current bid prices of the Bonds obtained from
dealers or brokers who customarily deal in bonds comparable to those held in
the Trust; (2) if bid prices are not available for any of the Bonds, on the
basis of bid prices for comparable bonds; (3) by causing the value of the
Bonds to be determined by others engaged in the practice of evaluating,
quoting or appraising comparable bonds; or (4) by any combination of the
above. Although the Unit value is based on the bid prices of the Bonds, the
Units are sold initially to the public at the Public Offering Price based on
the offering prices of the Bonds.
The initial or primary Public Offering Price of the Units and the Sponsor's
initial repurchase price per Unit are based on the offering price per Unit of
the underlying Bonds plus the applicable sales charge and interest accrued but
undistributed. The secondary market Public Offering Price and the Redemption
Price per Unit are based on the bid price per Unit of the Bonds in the
portfolio of the Trust plus the applicable sales charge and accrued interest.
The offering price of Bonds in the portfolio of the Trust may be expected to
range from 1%-2% more than the bid price of such Bonds. On the Date of
Deposit, the offering side evaluation of the Bonds in the portfolio of the
Trust was higher than the bid side evaluation of such Bonds by 1.4% of the
aggregate principal amount of such Bonds.
22
OTHER RIGHTS OF CERTIFICATEHOLDERS
The Trustee shall furnish Certificateholders in connection with each
distribution a statement of the amount of interest and, if any, the amount of
other receipts (received since the preceding distribution) being distributed,
expressed in each case as a dollar amount representing the pro rata share of
each Unit outstanding. Within a reasonable period of time after the end of
each calendar year, the Trustee shall furnish to each person who at any time
during the calendar year was a registered Certificateholder a statement 1) as
to the Interest Account: interest received (including amounts representing
interest received upon any disposition of Bonds), deductions for fees and
expenses of the Trust, for purchases of Replacement Bonds and for redemptions
of Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; 2) as to the Principal Account: the
dates of disposition of any Bonds and the net proceeds received therefrom
(excluding any portion representing accrued interest), the amount paid for
purchases of Replacement Bonds and for redemptions of Units, if any,
deductions for payment of applicable taxes and fees and expenses of the
Trustee, and the balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount representing
the pro rata share of each Unit outstanding on the last business day of such
calendar year; 3) a list of the Bonds held and the number of Units outstanding
on the last business day of such calendar year; 4) the Redemption Price based
upon the last computation thereof made during such calendar year; and 5)
amounts actually distributed during such calendar year from the Interest
Account and from the Principal Account, separately stated, expressed both as
total dollar amounts and as dollar amounts representing the pro rata share of
each Unit outstanding.
The Indenture requires the Trust to be audited on an annual basis at the
expense of the Trust by independent auditors selected by the Sponsor. The
Trustee shall not be required, however, to cause such an audit to be performed
if its cost to the Trust shall exceed $.50 per Unit on an annual basis.
Certificateholders may obtain a copy of such audited financial statements upon
request.
In order to comply with Federal and state tax reporting requirements,
Certificateholders will be furnished, upon request to the Trustee, evaluations
of the Bonds in the Trust furnished to it by the Evaluator.
The Trustee is authorized to treat as the record owner of Units that person
who is registered as such owner on the books of the Trustee. Ownership of
Units of the Trust is evidenced by separate registered certificates executed
by the Trustee and the Sponsor. Certificates are transferable by presentation
and surrender to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Certificateholder must sign exactly
as his name appears on the face of the certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or such other signature guarantee program in addition to, or
in substitution for, STAMP, as may be accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority. Certificates will be
issued in denominations of one Unit or any multiple thereof. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity, evidence of ownership and payment of
expenses incurred. Mutilated certificates must be surrendered to the Trustee
for replacement. Although no such charge is now made or contemplated, the
Trustee may require a Certificateholder to pay a reasonable fee to be
determined by the Trustee for each certificate reissued or transferred and to
pay any governmental charge that may be imposed in connection with each such
transfer or interchange.
23
SPONSOR INFORMATION
Ranson Capital Corporation, an investment banking firm created in 1990 by a
number of former employees of Ranson & Company, Inc., Sponsor of Series 1 - 50
of The Kansas Tax-Exempt Trust, is the Sponsor of the Trust. Ranson &
Company, Inc. was originally organized in Kansas in 1935 as the Ranson-
Davidson Company. In 1955, S. H. Ranson, Jr. purchased the Davidson interest
and the name was changed to Ranson & Company, Inc. During its fifty year
history, the Company has been active in public and corporate finance and has
sold bonds and mutual funds and maintained secondary market activities
relating thereto. At present, Ranson Capital Corporation, which is a member
of the National Association of Securities Dealers, Inc., is the investment
advisor to the Kansas Municipal Fund, the Kansas Insured Municipal Fund -
Limited Maturity and the Nebraska Municipal Fund and serves as the financial
advisor and as an underwriter for issuers in the Midwest and Southwest,
especially in Kansas, Missouri and Texas.
The Company's offices are currently located at 120 South Market, Suite 450,
Wichita, Kansas 67202. As of May 31, 1995, the total unaudited stockholders'
equity of Ranson Capital Corporation was $928,845. (This paragraph relates
only to the Sponsor and not to any Series of The Kansas Tax-Exempt Trust or to
any other dealer. The information is included herein only for the purpose of
informing investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations. More detailed financial
information will be made available by the Sponsor upon request.)
Dealers will purchase the Units from the Sponsor on the Date of Deposit at
a price equal to the Public Offering Price per Unit less that percentage
indicated under "Public Offering Information." Any reduced sales charge for
quantity purchases as described under "Public Offering Information" will be
the responsibility of the dealer. In addition to that portion of the sales
commission retained by the Sponsor, the Sponsor will realize a profit or
sustain a loss, as the case may be, as a result of the difference between the
price paid for the Bonds by the Sponsor and the cost of such Bonds to the
Trust (which is based on the aggregate offering price of the Bonds in the
portfolio of the Trust on the Date of Deposit as determined by Stern Brothers
& Co.). See "Trust Portfolio." The Sponsor may also realize profits or
sustain losses with respect to Bonds deposited in the Trust which were
acquired by the Sponsor from underwriting syndicates of which it was a member.
The Sponsor has participated as sole underwriter or as manager or as a member
of the underwriting syndicate from which 6% of the aggregate principal amount
of the Bonds in the portfolio of the Trust were acquired. The Sponsor may
realize additional profit or loss during the initial offering period as a
result of the possible fluctuations in the market value of the Bonds in the
Trust after the Date of Deposit.
As stated under "Redemption and Repurchase of Units," the Sponsor intends
to maintain a secondary market for the Units of the Trust. In so maintaining
a market, the Sponsor will also realize profits or sustain losses in the
amount of any difference between the price at which Units are purchased and
the price at which Units are resold (which price is based on the bid prices of
the Bonds in the Trust and includes a sales charge of 5.50%). In addition,
the Sponsor will also realize profits or sustain losses resulting from a
redemption of such repurchased Units at a price above or below the purchase
price for such Units.
If the Sponsor shall fail to perform any of its duties under the Indenture
or become incapable of acting or become bankrupt or its affairs are taken over
by public authorities, then the Trustee may (i) appoint a successor Sponsor at
rates of compensation deemed by the Trustee to be reasonable and not exceeding
24
amounts prescribed by the Securities and Exchange Commission, (ii) terminate
the Indenture and liquidate the Trust as provided therein or (iii) continue to
act as Trustee without terminating the Indenture.
TRUSTEE INFORMATION
The Trustee, Investors Fiduciary Trust Company, is a trust company
specializing in investment related services, organized and existing under the
laws of Missouri, having its trust office at 127 West 10th Street, Kansas
City, Missouri 64105. The Trustee is subject to supervision and examination
by the Division of Finance of the State of Missouri and the Federal Deposit
Insurance Corporation. The Trustee is a wholly owned subsidiary of State
Street Boston Corporation.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Bonds for the Trust portfolio. The Trustee is
empowered to sell, for the purpose of redeeming Units tendered by any
Certificateholder and for the payment of expenses for which funds may not be
available, such of the Bonds as are designated by the Sponsor as the Trustee
in its sole discretion may deem necessary. The Sponsor is empowered, but not
obligated, to direct the Trustee to dispose of Bonds upon default in payment
of principal or interest, institution of certain legal proceedings, default
under other documents adversely affecting debt service, default in payment of
principal or interest on other obligations of the same issuer, decline in
projected income pledged for debt service on revenue bonds or decline in price
or the occurrence of other market or credit factors, including advance
refunding (i.e., the issuance of refunding securities and the deposit of the
proceeds thereof in trust or escrow to retire the refunded securities on their
respective redemption dates), so that in the opinion of the Sponsor the
retention of such Bonds would be detrimental to the interest of the
Certificateholders. The Sponsor is required to instruct the Trustee to reject
any offer made by an issuer of any of the Bonds to issue new obligations in
exchange or substitution for any Bond pursuant to a refunding or refinancing
plan, except that the Sponsor may instruct the Trustee to accept or reject
such an offer or to take any other action with respect thereto as the Sponsor
may deem proper if (1) the issuer is in default with respect to such Bond or
(2) in the written opinion of the Sponsor the issuer will probably default
with respect to such Bond in the reasonably foreseeable future. Any
obligation so received in exchange or substitution will be held by the Trustee
subject to the terms and conditions of the Indenture to the same extent as
Bonds originally deposited thereunder. Within five days after the deposit of
obligations in exchange or substitution for underlying Bonds, the Trustee is
required to give notice thereof to each Certificateholder, identifying the
Bonds eliminated and the Bonds substituted therefor. Except as stated herein
and under "Description of Trust Portfolio" regarding the substitution of
Replacement Bonds for Failed Bonds, the acquisition by the Trust of any
securities other than the Bonds initially deposited is not permitted.
If any default in the payment of principal or interest on any Bond occurs
and no provision for payment is made therefor within 30 days, the Trustee is
required to notify the Sponsor thereof. If the Sponsor fails to instruct the
Trustee to sell or to hold such Bond within 30 days after notification by the
Trustee to the Sponsor of such default, the Trustee may in its discretion sell
the defaulted Bond and not be liable for any depreciation or loss thereby
incurred.
In accordance with the Indenture, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the certificates issued by
the Trust to, every Certificateholder of the Trust. Such books and records
shall be open to inspection by any Certificateholder at all reasonable times
during the usual business hours. The Trustee shall make such annual or other
25
reports as may from time to time be required under any applicable state or
Federal statute, rule or regulation. The Trustee is required to keep a
certified copy or duplicate original of the Indenture on file in its office
available for inspection at all reasonable times during the usual business
hours by any Certificateholder, together with a current list of the Bonds held
in the Trust.
Under the Indenture, the Trustee or any successor trustee may resign and be
discharged of the trust created by the Indenture by executing an instrument in
writing and filing the same with the Sponsor. The Trustee or successor
trustee must mail a copy of the notice of resignation to all
Certificateholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Indenture at any time or without cause.
Notice of such removal and appointment shall be mailed to each
Certificateholder by the Sponsor. Upon execution of a written acceptance of
such appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a corporation organized under the laws of the United States, or any
state thereof, be authorized under such laws to exercise trust powers and have
at all times an aggregate capital, surplus and undivided profits of not less
than $5,000,000.
UNDERWRITING
<TABLE>
The Underwriters named below have severally purchased Units in the
following respective amounts from the Sponsor.
<CAPTION>
NAME ADDRESS UNITS
<S> <C> <C>
Edward D. Jones & Co. 201 Progress Parkway. 1,500
Maryland Heights, Missouri 63043
Ranson Capital Corporation 120 S. Market, Suite 450 1,020
Wichita, Kansas 67202
A.G. Edwards & Sons, Inc. One North Jefferson 100
St. Louis, Missouri 63013
B. C. Christopher 4717 Grand Avenue 100
Division of Fahnestock & Co., Inc. Kansas City, Missouri 64112
26
Linsco/Private Ledger Corp. 155 Federal Street, 14th Floor 100
Boston, MA 02110
Fidelity Capital Markets, 164 Northern Avenue, zt3 100
a Division of National Financial Boston, MA 02210
Services Corporation
</TABLE>
Underwriters and broker-dealers of the Trust are eligible to participate in
a program in which such firms receive from the Sponsor a nominal award for
each of their registered representatives who have sold a minimum number of
units of unit investment trusts created by the Sponsor during a specified time
period. In addition, at various times the Sponsor may implement other
programs under which the sales force of an Underwriter, broker or dealer may
be eligible to win other nominal awards for certain sales efforts, or under
which the Sponsor will reallow to any such Underwriter, 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
Underwriters, brokers or dealers for certain services or activities which are
primarily intended to result in sales of Units of the Trust. Such payments
are made by the Sponsor out of its own assets, and not out of the assets of
the Trust. These programs will not change the price Unitholders pay for their
Units or the amount that the Trust will receive from the Units sold.
Units may also be sold to dealers at prices representing the per Unit
concession stated under "Public Offering Information." However, resales of
Units by such dealers to the public will be made at the Public Offering Price
described in the Prospectus. The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units and the right to change
the amount of the concession from time to time Underwriters will acquire Units
from the Sponsor based on the amount of Units underwritten. The concessions
from the Public Offering Price will be as set forth in the following table:
<TABLE>
<CAPTION>
100-249 250-499 Units 500-999 Units 1,000 or More Units
Underwritten Underwritten Underwritten Underwritten
<C> <C> <C> <C>
3.50% 3.60% 3.80% 4.00%
</TABLE>
In addition, the Sponsor has agreed to provide Underwriters with an
additional concession of $2.50 per Unit for committing to underwrite a total
of 1,500 or more Units.
LEGAL AND AUDITING MATTERS
The legality of the Units offered hereby and certain matters relating to
Federal and Kansas tax law have been passed upon by Chapman and Cutler,
Chicago, Illinois as special counsel for the Sponsor.
The statement of net assets, including the Trust portfolio, of the Trust at
the opening of business on June 22, 1995, the Date of Deposit, appearing in
this Prospectus and Registration Statement has been audited by Allen, Gibbs &
27
Houlik, L.C., independent auditors, as set forth in their report appearing
elsewhere herein, and is included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
DESCRIPTION OF BOND RATINGS
STANDARD & POOR'S, A DIVISION OF THE MCGRAW-HILL COMPANIES, INC.
A description of the applicable Standard & Poor's rating symbols and their
meanings follows:
A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
debt obligation. This assessment may take into consideration obligators such
as guarantors, insurers or lessees.
The bond rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability
for a particular investor.
The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable.
Standard & Poor's does not perform an audit in connection with any rating and
may, on occasion, rely on unaudited financial information. The ratings may be
changed, suspended or withdrawn as a result of changes in, or unavailability
of, such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1) Likelihood of default--capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance
with the terms of the obligation;
2) Nature of and provisions of the obligation;
3) Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangements under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA_This is the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA_Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A_Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher rated
categories.
BBB_Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
28
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.
Plus (+) or Minus (-): The ratings from "AA" to "BBB" may be modified by
the addition of a plus or minus sign to show relative standing within the
major rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent
upon the successful and timely completion of the project. This rating,
however, while addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of default upon
failure of, such completion. Accordingly, the investor should exercise his
own judgment with respect to such likelihood and risk.
L: The letter "L" indicates that the rating pertains to the principal
amount of those bonds where the underlying deposit collateral is fully insured
by the Federal Savings & Loan Insurance Corp. or the Federal Deposit Insurance
Corp.
MOODY'S INVESTORS SERVICE, INC. A brief description of the applicable
Moody's Investors Service, Inc. rating symbols and their meanings follow:
Aaa_Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large, or by an
exceptionally stable, margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Their safety is so absolute that, with the occasional exception of oversupply
in a few specific instances, characteristically, their market value is
affected solely by money market fluctuations.
Aa_Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities. Their market value is virtually immune to all but money market
influences, with the occasional exception of oversupply in few specific
instances.
A_Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to some degree by
economic performance during a sustained period of depressed business
conditions, but, during periods of normalcy, A-rated bonds frequently move in
parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.
Baa_Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected or poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. The market value of Baa-rated
29
bonds is more sensitive to changes in economic circumstances, and aside from
occasional speculative factors applying to some bonds of this class, Baa
market valuations move in parallel with Aaa, Aa and A obligations during
periods of economic normalcy, except in instances of oversupply.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the
high end of its category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
Con. (---)_Bonds for which the security depends upon the completion of some
act or the fulfillment of some condition are rated conditionally. These are
bonds secured by a) earnings of projects under construction, b) earnings of
projects unseasoned in operation experience, c) rentals which begin when
facilities are completed, or d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
TAX-EXEMPT/TAXABLE ESTIMATED CURRENT RETURN EQUIVALENTS
As of the date of this Prospectus, the following table shows the
approximate taxable estimated current returns for individuals that are
equivalent to tax-exempt estimated current returns under combined Federal and
state taxes, using the published 1995 Federal and Kansas tax rates*. The
table incorporates increased tax rates for higher-income taxpayers that were
included in the Revenue Reconciliation Act of 1993. The combined Federal and
state tax brackets shown reflect the fact that state tax payments are
deductible for Federal tax purposes and that no deduction of the Federal tax
is claimed for state purposes. The table illustrates approximately what you
would have to earn on taxable investments to equal tax-exempt estimated
current returns in your income tax bracket under present tax law. Locate your
income (after deductions and exemptions), then locate your tax bracket based
on joint or single tax filing. Read across to the equivalent
taxable estimated current return you would need to match tax-free income. The
taxable equivalent estimated current returns may be somewhat higher than the
equivalent returns indicated in the table below for those individuals who have
Adjusted Gross Income in excess of $114,700.
<TABLE>
<CAPTION>
Taxable Income Tax-Exempt Estimated Current Return
Single Joint
Return Return Tax 41/2% 5% 51/2% 6% 61/2% 7% 71/2%
In thousands Bracket Equivalent Taxable Estimated Current Returns
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 23.35 21.40% 5.73% 6.36% 7.00% 7.63% 8.27% 8.91% 9.54%
$ 0 - 39.00 20.30 5.65 6.27 6.90 7.53 8.16 8.78 9.41
23.35- 56.55 33.60 6.78 7.53 8.28 9.04 9.79 10.54 11.30
39.00 - 94.25 32.60 6.68 7.42 8.16 8.90 9.64 10.39 11.13
56.55- 117.95 36.40 7.08 7.86 8.65 9.43 10.22 11.01 11.79
94.25- 143.60 35.50 6.98 7.75 8.53 9.30 10.08 10.85 11.63
117.95- 256.50 41.00 7.63 8.47 9.32 10.17 11.02 11.86 12.71
143.60- 256.50 40.10 7.51 8.35 9.18 10.02 10.85 11.69 12.52
Over 256.50 44.30 8.08 8.98 9.87 10.77 11.67 12.57 13.46
Over 256.50 43.50 7.96 8.85 9.73 10.62 11.50 12.39 13.27
</TABLE>
30
[FN]
* The table does not reflect the effect of two adjustments designed to
phase-out the advantage of itemized deductions and personal exemptions for
higher income taxpayers. These adjustments, in effect, increase the marginal
Federal tax rate above the stated marginal tax rate by eliminating a portion
of claimed itemized deductions and potentially eliminating entirely the
effect of personal exemptions in determining Taxable Income. The total
impact of the adjustments, which will vary from taxpayer to taxpayer, is
dependent upon the itemized deductions and personal exemptions claimed.
A comparison of tax-free and equivalent taxable estimated current returns with
the returns on various taxable investments is one element to consider in
making an investment decision. The Sponsor may from time to time in its
advertising and sales material compare the then current estimated returns on
the Trust and return over specified periods on other similar Ranson Capital
Corporation sponsored unit investment trusts with returns on taxable
investments such as corporate or U.S. Government bonds, bank CDs and money
market accounts or money market funds, each of which has investment
characteristics that may differ from those of the Trust. U.S. Government
bonds, for example, are backed by the full faith and credit of the U.S.
Government and bank CDs and money market accounts are insured by an agency of
the federal government. Money market accounts and money market funds provide
stability of principal, but pay interest at rates that vary with the condition
of the short-term debt market. The investment characteristics of the Trust
are described more fully elsewhere in this Prospectus.
31
REPORT OF ALLEN, GIBBS & HOULIK, L.C.
INDEPENDENT AUDITORS
CERTIFICATEHOLDERS
THE KANSAS TAX-EXEMPT TRUST
SERIES 76
We have audited the accompanying statement of net assets, including the
Trust portfolio, of The Kansas Tax-Exempt Trust, Series 76, as of the opening
of business on June 22, 1995, the Date of Deposit. This statement of net
assets is the responsibility of the Trust's Sponsor. Our responsibility is
to express an opinion on this statement of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of net assets is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of net
assets. Our procedures included confirmation of the Bonds held by the
Trustee at the opening of business on June 22, 1995. An audit also includes
assessing the accounting principles used and significant estimates made by
the Trust's Sponsor, as well as evaluating the overall statement of net
assets presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of The Kansas Tax-
Exempt Trust, Series 76 at the opening of business on June 22, 1995, in
conformity with generally accepted accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
June 22, 1995
<TABLE>
THE KANSAS TAX-EXEMPT TRUST
<CAPTION>
SERIES 76
STATEMENT OF NET ASSETS
AT THE OPENING OF BUSINESS ON June 22, 1995, THE DATE OF DEPOSIT
<S> <C>
TRUST PROPERTY
Investment in securities-
Bonds deposited in Trust (1) $ 2,776,473
Accrued interest to Date of Deposit on Bonds (2) 38,115
____________
2,814,588
Less distributions payable (2) 38,115
____________
Net assets, applicable to 2,920 outstanding Units of
fractional undivided interest $ 2,776,473
INTEREST OF CERTIFICATEHOLDERS
Cost to investors (3) $ 2,919,530
Less sales charge (3) 143,057
____________
Net proceeds to the Trust, equal to net assets $ 2,776,473
</TABLE>
[FN]
NOTES:
(1) Aggregate cost to the Trust of the Bonds listed in the Trust Portfolio
is based on offering side evaluations determined by Stern Brothers & Co.
(2) Pursuant to the Indenture, the Trustee will advance funds in the amount
of $40,396 representing the accrued interest to June 27, 1995 (the "First
Settlement Date") and such advance will be distributed to the Sponsor.
(3) The aggregate cost to investors (exclusive of interest) includes a sales
charge computed at the rate of 4.90% of the Public Offering Price
(equivalent to 5.152% of the net amount invested) assuming no reduction of
sales charge for quantity purchases.
32
<TABLE>
THE KANSAS TAX-EXEMPT TRUST, SERIES 76
TRUST PORTFOLIO AT THE OPENING OF BUSINESS ON June 22, 1995, THE DATE OF DEPOSIT
<CAPTION>
NAME OF ISSUER, TITLE, COUPON RATE
AND MATURITY DATE OF BONDS DEPOSITED
AGGREGATE IN TRUST OR REPRESENTED BY SPONSOR'S REDEMPTION COST OF BONDS
PRINCIPAL CONTRACTS TO PURCHASE BONDS(1)(5) RATINGS(2) PROVISION(3) TO TRUST(4)
_________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
$ @@ 150,000 Unified School District No. 409 Atchison County, Aaa# 2004 @ 100 $ 150,000
Kansas (Atchison) General Obligation Bonds,
Series 1995 (Capital Guaranty Insured) 5.50%,
Due 9/1/2010
@@ 600,000 City of Salina, Kansas Hospital Revenue Refunding AAA 2003 @ 100 569,646
Bonds (Asbury-Salina Regional Medical Center, Inc. 2009 @ 100 S.F.
Project) Series 1993 (AMBAC Insured) 5.30%, Due
10/1/2013
%% 250,000 Unified School District No. 409 Atchison County, Aaa# 2004 @ 100 244,705
@@ Kansas (Atchison) General Obligation Bonds,
Series 1995 (Capital Guaranty Insured) 5.375%,
Due 9/1/2015
125,000 Reno County, Kansas Sedgwick County, Kansas Finney AAA Noncallable 36,602(6)
County, Kansas Single Family Mortgage Revenue Bonds
(Multiple Originators and Servicers), 1984 Series A
(MBIA Insured) 0.00%, Due 4/1/2016
@@ 600,000 City of Kansas City, Kansas Utility System Refunding AAA 2004 @ 102 633,108
and Improvement Revenue Bonds, Series 1994 (Financial 2006 @ 100
Guaranty Insured) 6.375%, Due 9/1/2023
500,000 Kansas Development Finance Authority Housing AAA 1995 @ 100 495,000
Development Revenue Refunding Bonds, Series 1993A
(MBIA Insured) 6.10%, Due 7/1/2024
@@ 600,000 City of Burlington, Kansas Pollution Control AAA 2001 @ 102 647,412
Refunding Revenue Bonds, Series 1991 (Kansas 2005 @ 100
Gas and Electric Company) (MBIA Insured) 7.00%,
Due 6/1/2031
___________ ___________
$2,825,000 $2,776,473
</TABLE>
33
[FN]
See "Notes to Trust Portfolio."
NOTES TO TRUST PORTFOLIO:
(1) Contracts to acquire Bonds were entered into by the Sponsor during the
period May 18, 1995 through June 19, 1995. All Bonds are represented by
regular way contracts, unless otherwise indicated, for the performance of
which cash or an irrevocable letter of credit has been deposited with the
Trustee.
(2) Securities ratings represent the latest published ratings by Standard &
Poor's, unless marked with a "#" in which case the rating is by Moody's or
unless marked with a "&&" in which case the Sponsor expects Standard &
Poor's or Moody's, upon the receipt of an insurance policy obtained by the
issuer, to issue a AAA rating. A brief description of the applicable
Standard & Poor's or Moody's rating symbols and their meanings is set forth
under "Description of Bond Ratings." "N/R" indicates that no rating has
been provided for such Bonds; in the opinion of the Sponsor, these Bonds
have credit characteristics sufficiently similar to the credit
characteristics of interest-bearing tax-exempt obligations that were so
rated as to be acceptable for acquisition by the Trust. "**" indicates
rating is contingent upon receipt by Standard & Poor's or Moody's of final
documentation.
(3) There is shown under this heading the year in which each issue of Bonds
is initially redeemable and the redemption price for that year or, if
currently redeemable, the redemption price in 1995 unless otherwise
indicated, each issue continues to be redeemable at declining prices
thereafter, but not below par value. The prices at which the Bonds may be
redeemed or called prior to maturity may or may not include a premium and,
in certain cases, may be less than the cost of the Bonds to the Trust. In
addition, certain Bonds in the Trust portfolio may be redeemed in whole or
in part other than by operation of the stated redemption or sinking fund
provisions under certain unusual or extraordinary circumstances specified
in the instruments setting forth the terms and provisions of such Bonds.
"S.F." indicates a sinking fund is established with respect to an issue of
Bonds.
(4) During the initial offering period, evaluations of the Bonds are made on
the basis of current offering side evaluations of the Bonds. The aggregate
offering price is greater than the aggregate bid price of the Bonds, which
is the basis on which Redemption Prices will be determined for purposes of
redemption of Units after the initial offering period.
(5) Other information regarding the Bonds in the Trust, at the opening of
business on the Date of Deposit, is as follows:
<TABLE>
<CAPTION>
Cost of Bonds Profit To Annual Interest Bid Side Value
To Sponsor Sponsor Income To Trust Of Bonds
_____________ ________ ______________ _____________
<C> <C> <C> <C>
$2,756,257 $20,216 $164,237 $2,745,425
</TABLE>
(6) This Bond has been purchased at a discount from the par value because
there is no stated interest income thereon. Such bonds are normally
described as "zero coupon" bonds. Over the life of such bonds the value
increases such that upon maturity the holders of such bonds will receive
100% of the principal amount thereof. Approximately 4% of the aggregate
principal amount of the Bonds in the Trust are "zero coupon" bonds.
%% This Bond is the same issue as another Bond in the portfolio.
@@ This Bond was issued at an original issue discount.
* This Bond is represented by a "when, as and if issued" or "delayed
delivery" contract and has an expected settlement date after the "First
Settlement Date" of the Trust. Interest on this Bond begins accruing to
the benefit of Unitholders on the date of delivery.
34
ESTIMATED CASH FLOWS TO UNITHOLDERS
The table below sets forth the per Unit estimated monthly distribution of
interest and principal to Unitholders. The table assumes no changes in
expenses, no changes in the current interest rates, no exchanges, redemptions,
sales or prepayments of the underlying Bonds prior to maturity or expected
retirement date and the receipt of principal upon maturity or expected
retirement date. To the extent the foregoing assumptions change, actual
distributions will vary.
<TABLE>
SERIES 76
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
__________________ ____________ ____________ ____________
<S> <C> <C> <C>
August 1995 $2.67 $ 0.00 $ 2.67
September 1995 - May 2002 4.45 0.00 4.45
June 2002 4.45 209.59 214.04
July 2002 - August 2006 3.30 0.00 3.30
September 2006 3.30 205.48 208.78
October 2006 - August 2010 2.24 0.00 2.24
September 2010 2.24 51.37 53.61
October 2010 - September 2013 2.02 0.00 2.02
October 2013 2.02 205.48 207.50
November 2013 - August 2015 1.15 0.00 1.15
September 2015 1.15 85.62 86.77
October 2015 - March 2016 0.78 0.00 0.78
April 2016 0.78 42.81 43.59
May 2016 - June 2024 0.79 0.00 0.79
July 2024 0.79 171.23 172.02
</TABLE>
35
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Trust, the Sponsor or any dealer. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any state
to any person to whom it is not lawful to make such offer in such state.
This Prospectus contains information concerning the Trust and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Trust has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
<TABLE>
TABLE OF CONTENTS
<CAPTION>
TITLE PAGE
_____ ____
<S> <C>
General Summary of Information 1
Summary of Essential Financial Information 3
Summary of the Trust 5
Description of Trust Portfolio 7
Objectives of the Trust 11
Estimated Current Return and Estimated Long-Term Return 11
Public Offering Information 12
Accrued Interest 13
Redemption and Repurchase of Units 14
Distribution of Interest and Principal 15
Distribution Reinvestment Option 16
Tax Status (Federal, State, Capital Gains) 17
Expenses of the Trust 21
Evaluation of the Trust 22
Other Rights of Certificateholders 23
Sponsor Information 24
Trustee Information 25
Underwriting 26
Legal and Auditing Matters 27
Description of Bond Ratings 28
Tax-Exempt/Taxable Estimated Current Return Equivalents 30
Report of Allen, Gibbs & Houlik, L.C. Independent Auditors 32
Statement of Net Assets 32
Trust Portfolio 33
Notes to Trust Portfolio 34
Estimated Cash Flows to Unitholders 35
</TABLE>
36
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants, evaluator,
rating services and legal counsel
The following exhibits:
1.1 Trust Agreement between Ranson Capital Corporation, as Depositor, and
Investors Fiduciary Trust Company, as Trustee (to be supplied by
amendment).
3.1 Opinion and consent of Chapman and Cutler, special counsel to the
Depositor, as to legality of securities being registered (to be
supplied by amendment).
3.2 Opinion of Chapman and Cutler, special counsel to the Depositor, as to
Federal and Kansas tax status of securities being registered
(to be supplied by amendment).
4.1 Consent of Stern Brothers & Co., special evaluator (to be supplied
by amendment).
4.2 Consent of Allen, Gibbs & Houlik, L.C. (to be supplied by amendment).
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
The Kansas Tax-Exempt Trust, Series 77 has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Wichita and State of Kansas on the 17th day of
August, 1995.
THE KANSAS TAX-EXEMPT TRUST, SERIES 77
(Registrant)
By RANSON CAPITAL CORPORATION
(Depositor)
Attest John A. Ranson
____________________
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
and on August 17, 1995.
Signature Title )
John A. Ranson President, Chief Executive
__________________ Officer and Director
Alex R. Meitzner Executive Vice President
__________________ and Director
Robin K. Pinkerton Secretary, Treasurer and
__________________ Director ) John A. Ranson
___________________
___________________________________________________________________________
An executed copy of each of the related powers of attorney was filed with the
Securities and Exchange Commission in connection with the Registration
Statement on Form S-6 of The Kansas Tax-Exempt Trust, Series 51
(File No. 33-46376) and Series 52 (File No. 33-47687) and the same are
hereby incorporated herein by this reference.
S-2
