File No. 33-58425
CIK No. 927229
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1
To
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 RANSON MUNICIPAL TRUST MULTI-STATE SERIES 5
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 CHAPMAN AND CUTLER
Attention: John A. Ranson Attention: Eric F. Fess
120 South Market, Suite 450 111 West Monroe Street
Wichita, Kansas 67202 Chicago, Illinois 60603
E. Title and amount of securities being registered: 8,648* Units
F. Proposed maximum offering price to the public of the securities being
registered ($1,010 per Unit**): $8,734,480
G. Amount of filing fee, computed at one-twenty-ninth of 1 percent of the
proposed maximum aggregate offering price to the public: $3,011.89
($348.28 previously paid)
H. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT
/X/ Check box if it is proposed that this filing will become effective on
April 11, 1995 at 11:00 A.M. pursuant to Rule 487
____________________________________________________________________________
* 5,765 Units registered for primary distribution.
2,883 Units registered for resale by Depositor of Units previously sold in
primary distribution.
** ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE
____________________________________________________________________________
THE RANSON MUNICIPAL TRUST
MULTI-STATE SERIES 5
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 Trusts
6. Execution and termination of ) Summary of the Trusts
Trust Indenture and Agreement
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) Description of Trust Portfolios-
) 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 Portfolios-
) 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 ) Summary of the Trusts
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
) Purchased and Accrued Interest
) Public Offering Information
) Expenses of the Trusts
(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
) Purchased and Accrued Interest
) 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 Trusts
) Public Offering Information
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) Summary of the Trusts
underlying securities ) Description of Trust Portfolios
) Trustee Information
17. Withdrawal or redemption ) Redemption and Repurchase
) of Units
) Sponsor Information
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Purchased and Accrued Interest
) Distributions of Interest and
) Principal
(b) Reinvestment of distributions ) *
(c) Reserves or special funds ) Expenses of the Trusts
) Summary of the Trusts
(d) Schedule of distributions ) *
19. records, accounts and reports ) Other Rights of Certificate-
) holders
20. Certain miscellaneous provisions ) Summary of the Trusts
of Trust Agreement ) Sponsor Information
) Trustee Information
21. Loans to security holders ) *
22. Limitations on liability ) Summary of the Trusts
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 securiies ) Prospectus Front Cover Page
by states ) Objectives of the Trusts
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
) Purchased and Accrued Interest
) Redemption and Repurchase
) of Units
(b) Schedule as to offering ) *
price )
(c) Variation in offering ) Purchased and Accrued Interest
price to certain persons ) Public Offering Information
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Estimated Current Return
) Purchased and Accrued Interest
) 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 Trusts
)
50. Trustee's lien ) Purchased and Accrued Interest
) Distribution of Interest and
) Principal
) Expenses of the Trusts
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 Portfolios-
elimination of portfolio securities ) Replacement Bonds
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution ) Trustee Information
or elimination of underlying ) Description of Trust Portfolios-
securities ) 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. ) periodic payment certificates
58. )
59. Financial statements (Instructions ) Report of Allen, Gibbs & Houlik
1(c) to Form S-6) ) Independent Auditors
) Statement of Net Assets
THE RANSON MUNICIPAL TRUST, MULTI-STATE SERIES 5
THE KANSAS TAX-EXEMPT TRUST, SERIES 74
THE NEBRASKA TAX-EXEMPT TRUST, SERIES 5
THE TRUST. The Ranson Municipal Trust, Multi-State Series 5 consists of the
two underlying separate unit investment trusts set forth above. The Kansas
Tax-Exempt Trust (the "Kansas Trust") and The Nebraska Tax-Exempt Trust (the
"Nebraska Trust") are collectively referred to herein as the "Trusts". The
Trusts initially consist of bonds and delivery statements relating to
contracts to purchase bonds and, thereafter, will consist of a $3,045,000
(Kansas Trust) and $2,500,000 (Nebraska Trust) aggregate principal amount
portfolio comprised of interest bearing obligations issued by or on behalf of
municipalities or other governmental authorities in the States of Kansas and
Nebraska, respectively (the "Bonds" or "Securities"). In the opinion of
counsel, interest income to the Trusts and to Certificateholders thereof, with
certain exceptions, is exempt under existing law from Federal income taxes,
from state income taxes when held by residents of the state where the issuers
of the Bonds in such Trust are located and, in the case of the Kansas Trust,
from local Kansas intangible personal property taxes, but each Trust may be
subject to the Federal alternative minimum tax and other state and local
taxes. Capital gains, if any, are subject to tax. Neither of the Trusts will
hold more than 20% of its net assets in Securities which are subject to the
Federal alternative minimum tax. As of the Date of Deposit, none of the Bonds
in the Kansas Trust, and approximately 20% of the principal amount of the
Bonds in the Nebraska Trust, were subject to the Federal alternative minimum
tax. The objectives of the Trusts include 1) interest income which is exempt
from Federal income taxes, from state income taxes when held by residents of
the state where the issuers of the Bonds in such Trust are located, and, in
the case of the Kansas Trust, from intangible personal property taxes levied
by Kansas counties, cities and townships, 2) conservation of capital, and 3)
liquidity of investment (see "Objectives of the Trusts"). The payment of
interest and the preservation of capital are dependent upon the continuing
ability of the issuers and/or obligors of the Bonds to meet their respective
obligations. Certain of the Bonds are obligations which derive their payment
from mortgage loans. A substantial portion of such Bonds will probably be
redeemed prior to their scheduled maturities; any such early redemption will
reduce the aggregate principal amount of the affected Trust and may also
affect the Estimated Long-Term Return and the Estimated Current Return.
Depending on which Bonds are redeemed at any given time, the then Estimated
Current Return may be higher, lower or unchanged from the Estimated Current
Return that existed immediately prior to such redemption. The Sponsor has a
limited right to substitute other tax-exempt bonds in the Trust portfolios in
the event of a failed contract. There is no assurance that the Trusts'
objectives will be met. The Sponsor of the Trusts 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).
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 April 11, 1995.
RANSON CAPITAL CORPORATION
SPONSOR
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 a Trust divided by the number of Units
outstanding, plus a sales charge of 5.50% of the Public Offering Price (5.82%
of the aggregate bid price of the Bonds). If the Bonds in the Trusts were
available for direct purchase by investors, the purchase prices of the Bonds
would not include the sales charge included in the Public Offering Price of
the Units. In addition, on transactions entered into on and after April 12,
1995, there will be added an amount equal to the accrued interest from April
19, 1995 to the date of settlement (five business days after order) less
distributions from the Interest Account subsequent to April 19, 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 $999.06 and $999.69 for the Kansas Trust and the Nebraska Trust,
respectively. 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.
THE UNITS. As of the Date of Deposit each Unit represents a fractional
undivided interest in the principal and net income of the Trust as set forth
under "Summary of Essential Information." Initially, Units will be offered
for sale in the minimum amount of five Units.
DISTRIBUTIONS. Distributions of interest received by the Trusts will be made
on a monthly basis (pro-rated on an annual basis). The first distribution to
Certificateholders will be made on June 1, 1995 to holders of record on May
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 Returns and Estimated Long-Term Returns to Certificateholders as of
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 the applicable Trust. 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 each Trust (see "Redemption and Repurchase of Units").
2
<TABLE>
<CAPTION>
THE RANSON MUNICIPAL TRUST, MULTI-STATE SERIES 5
THE KANSAS TAX-EXEMPT TRUST, SERIES 74
THE NEBRASKA TAX-EXEMPT TRUST, SERIES 5
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
As of April 10, 1995, the business day prior to the Date of Deposit
SPONSOR AND EVALUATOR: RANSON CAPITAL CORPORATION
TRUSTEE: INVESTORS FIDUCIARY TRUST COMPANY
KANSAS NEBRASKA
TRUST TRUST
_____________ ______________
<S> <C> <C>
Principal Amount of Bonds in Trust $ 3,045,000 $ 2,500,000
Number of Units 3,165 2,600
Fractional Undivided Interest in Trust per Unit 1/3,165 1/2,600
Principal Amount (Par Value) of Bonds per Unit(1) $ 962.09 $ 961.54
Aggregate Offering Price of Bonds in the Trust $ 3,007,097 $ 2,471,832
Aggregate Offering Price of Bonds per Unit $ 950.11 $ 950.71
Plus Sales Charge 4.90% (5.152% of the Aggregate
Offering Price of the Bonds) $ 48.95 $ 48.98
Public Offering Price per Unit(2) $ 999.06 $ 999.69
Redemption Price per Unit(3) $ 940.94 $ 940.90
Sponsor's Initial Repurchase Price per Unit(3)(4) $ 950.11 $ 950.71
Excess of Public Offering Price per Unit Over
Redemption Price per Unit $ 58.12 $ 58.79
Excess of Public Offering Price per Unit Over
Sponsor's Initial Repurchase Price per Unit $ 48.95 $ 48.98
Estimated Annual Interest Income per Unit $ 58.50 $ 58.13
Less: Estimated Annual Expense per Unit $ 2.66 $ 2.45
Estimated Annual Net Interest Income per Unit $ 55.84 $ 55.37
Estimated Daily Rate of Net Interest Income Accrual per Unit $ .1551 $ .1538
Estimated Current Return(5)(6)(7) 5.56% 5.54%
Estimated Long-Term Return(5)(6)(7) 5.43% 5.42%
Initial Distribution per Unit(June 1, 1995) $ 4.01 $ 4.00
Minimum Principal Amount of Bonds of Trust Under Which
Indenture May Be Terminated $ 609,000 $ 500,000
</TABLE>
First Settlement Date April 19, 1995
Minimum Principal Distribution $1.00 per Unit
Mandatory Termination Date May 1, 2045
Distribution Dates First day of every month commencing June 1, 1995
Trustee's Annual Fee $1.22 per $1,000 principal amount of Bonds
Evaluator's Annual Fee $.25 per $1,000 principal amount of Bonds
Annual Audit Fee Maximum of $.40 per Unit
[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
3
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.
(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 (five 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 Trusts; 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 Returns 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 Trusts 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 Trusts will change, there is
no assurance that the present Estimated Long-Term Returns as indicated above
will be realized in the future. The Estimated Current 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 are set forth under the section entitled "Estimated Cash Flows to
Certificateholders."
4
SUMMARY OF THE TRUSTS
The Ranson Municipal Trust, Multi-State Series 5, which is comprised of two,
separate and distinct unit investment trusts, including The Kansas Tax-Exempt
Trust, Series 74 and The Nebraska Tax-Exempt Trust, Series 5, was created
under the laws of the State of Missouri pursuant to a Trust Indenture and
Agreement, dated the Date of Deposit (the "Indenture"), between Ranson Capital
Corporation, as Sponsor, and Investors Fiduciary Trust Company, as Trustee.
Each 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 for which such Trust is named and political
subdivisions, municipalities and authorities thereof, the interest on which is
excludable, in the opinion of recognized bond counsel, from Federal gross
income taxes, and in the case of the Kansas Trust is exempt from Kansas state
income tax and local Kansas intangible personal property taxes and in the case
of the Nebraska Trust is exempt from Nebraska state income tax. However, in
the case of corporations, interest on all obligations held by the Trusts may
be subject to the alternative minimum tax for Federal income tax purposes.
Accordingly, the Trusts may be appropriate only for investors who are not
subject to the alternative minimum tax. See "Tax Status (Federal, State,
Capital Gains)." An investment in the Trusts 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. The Sponsor cannot predict whether the value of the Bonds
in a portfolio will increase or decrease.
On the Date of Deposit, the Sponsor deposited with the Trustee an aggregate of
$3,045,000 and $2,500,000 principal amount of interest-bearing obligations for
the Kansas Trust and the Nebraska Trust, respectively, 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 3,165 Units for the Kansas Trust and 2,600 Units
for the Nebraska Trust, which are offered for sale by this Prospectus. Each
Unit initially offered represents that undivided interest set forth under
"Summary of Essential Financial Information." To the extent that any Units
are redeemed by the Trustee, the fractional undivided interest in such Trust
represented by each unredeemed Unit will increase, although the actual
interest in such Trust represented by such fraction will remain unchanged.
Units in a Trust will remain outstanding until redeemed upon tender to the
Trustee by Certificateholders, which may include the Sponsor, or until the
termination of the Indenture.
The Indenture may be amended at any time by consent of Certificateholders
representing at least 51% of the Units of the related 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 such Trust
except in connection with the limited right of substitution of Replacement
Bonds for failed Bonds (see "Description of Trust Portfolios") and for the
substitution of refunding bonds under certain circumstances. The Trustee
shall advise the Certificateholders of any amendment promptly after the
execution thereof.
5
Each Trust may be terminated at any time by consent of Certificateholders
representing at least 51% of the Units of the affected Trust then outstanding
or by the Trustee when the value of such Trust, as shown by any semi-annual
evaluation, is less than 20% of the original principal amount of such 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 such Trust to less than 40% of
the principal 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 such 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 such Trust maintained by the Trustee. The Trustee will
begin to liquidate any Bonds held in a Trust within a reasonable period of
time from said notification and shall deduct from the proceeds any accrued
costs, expenses or indemnities provided by the Indenture, including any
compensation due the Trustee, any costs of liquidation and any amounts
required for payment of any applicable taxes, governmental charges or final
operating costs of such Trust.
The Trustee shall then distribute to Certificateholders their pro rata shares
of the remaining balances in the Principal and Interest Accounts of such Trust
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 Trusts 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 Kansas
Trust are "zero coupon" bonds. None of the aggregate principal amount of the
Bonds in the Nebraska 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
6
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
Portfolios."
DESCRIPTION OF TRUST PORTFOLIOS
PORTFOLIOS. The Kansas Trust consists of 7 obligations of issuers located in
the State of Kansas. Two of the issues in the Kansas Trust are general
obligations of the governmental entities issuing them or are backed by the
taxing power thereof representing 21% of principal amount of bonds in the
Kansas 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:
Single-Family Housing, 2 (20%); Electric Utility, 2 (36%); and Transportation,
1 (23%). The dollar weighted average maturity of the Bonds in the Trust is
26.3 years. None of the issues in the Kansas Trust are subject to the Federal
alternative minimum tax.
Since the Kansas Trust will invest substantially all of its assets in Kansas
municipal securities, the Kansas Trust is susceptible to political and
economic factors affecting issuers of Kansas municipal securities. According
to the 1990 census, 2,477,574 people lived in Kansas, representing a 4.8%
increase over the 1980 census. Based on these numbers, Kansas ranked thirty-
second in the nation in population size. 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 March 31, 1995, the State of Kansas had no
general obligation bonds outstanding.
The Nebraska Trust consists of 6 obligations of issuers located in the State
of Nebraska. None of the issues in the Nebraska Trust are general obligations
of the governmental entities issuing them or are backed by the taxing power
thereof. The 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: Electric Utility, 3
(46%); Health Care, 1 (24%); and Housing, 2 (30%). The dollar weighted
average maturity of the Bonds in the Trust is 24.7 years. Approximately 20%
of the aggregate principal amount of the issues in the Nebraska Trust are
subject to the Federal alternative minimum tax.
Since the Trust will invest substantially all of its assets in Nebraska
municipal securities, the Trust is susceptible to political and economic
factors affecting the issuers of Nebraska municipal securities. The Nebraska
economy performed steadily during 1993 as the national economy slowly
expanded. The Nebraska economy generally avoided the national recession of
the early 1990s and continued to expand in 1993 with growth in the labor
force, job numbers, construction activity, business incorporations, retail
sales, tourism visits and expenditures and population. Overall, it is
anticipated that the state's economy will grow at a slightly slower rate
during the next two years, even if the national economy expands, as the
Nebraska economy tends to be less cyclical than the national economy. It
typically does not grow as fast as the national economy during expansions and
does not contract as much during recessions.
7
The number of Nebraska farms and ranches declined in 1993 to an estimated
55,000 from 56,000 in 1992. Since total land in farms and ranches remains
around 47 million acres, the size of the average farm and ranch increased 1.8
percent in 1993. Statewide, the average value of an acre of farmland
increased 9.0 percent by the end of 1993. The most recent Nebraska farm
income information reflects total cash receipts from farm marketings
decreased 2.9 percent in 1992 from the 1991 level. The leading non-farm job
sector in 1993 was the trade sector, comprising 25.2 percent of all non-farm
jobs. The number of trade sector jobs increased 1.4 percent from 1992 to
1993. The wholesale trade subsector accounted for 27.1 percent and the retail
subsector 72.9 percent of trade sector jobs. The services sector is the
second largest non-farm job sector accounting for 24.6 percent of total jobs.
The average monthly number of service sector jobs increased 1.2 percent in
1993 compared to 1992. The number of manufacturing jobs, which represents
13.5 percent of non-farm employment, increased 2.2 percent in 1993 compared to
1992. The finance, insurance, and real estate sector is an important job
category in Nebraska, especially in Omaha and Lincoln. In 1993, the number of
jobs in that sector averaged 50,274 per month, a 1.7 percent increase over
1992. Nationally, the number of finance, insurance, and real estate jobs
declined 1.3 percent. The travel and tourism industry is Nebraska's third
leading generator of out-of-state revenue, following agriculture and
manufacturing. The 1993 spring and summer floods in Nebraska threatened to
reduce tourism and tourism revenue in the state last year, however
expenditures in the State totaled over $1.9 billion in 1993, a 5.6 percent
increase over 1992. Travel industry employment totaled approximately 36,000
people within the State, who serviced the estimated 15.2 million visits to
Nebraska in 1993 by non-residents, a 3.4 percent increase over 1992.
The Legislature appropriated approximately $1.6 billion for State programs
from the State General Fund for fiscal year 1994, a reduction of $4.3 million
for the fiscal year 1993 budget, and recommended spending of approximately
$1.7 billion for fiscal year 1995. The major increases in the State budget
for the fiscal year 1993-95 biennium are the result of mandated programs and
entitlement programs and are concentrated primarily in the areas of medicaid,
State aid to schools, public assistance and special education. The budget
also allowed for a 3.0 percent budget reserve ($99.5 million) at the end of
the biennium.
The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of Bonds and does not
purport to be a complete or exhaustive description of all adverse conditions
to which the issuers in the Kansas and Nebraska Trusts are subject.
Additionally, many factors including national economic, social, and
environmental policies and conditions, which are not within the control of the
issuers of Bonds, could affect or could have an adverse impact on the
financial condition of the respective States and various agencies and
political subdivisions located in the respective States. 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
Trusts to pay interest on or principal of the Bonds.
Approximately 20% and 30% of the aggregate principal amount of the Bonds in
the Kansas Trust and Nebraska Trust, respectively consist of obligations which
derive their payment from mortgage loans. No more than 25% of a Trust's total
assets will be invested in mortgages originated by the same financial
institution. Certain of these bonds are single family mortgage revenue bonds
issued for the purpose of acquiring from originating financial institutions
notes secured by mortgages on residences located within the issuer's
boundaries and owned by persons of low or moderate income. In view of this,
an investment in a Trust should be made with an understanding of the
characteristics of such issuers and the risks which such an investment may
entail. Mortgage loans are generally partially or completely prepaid prior to
8
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 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
Trusts, 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.
Approximately 36% and 46% of the aggregate principal amount of the Bonds in
the Kansas Trust and the Nebraska Trust, respectively, consist 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 23% of the aggregate principal amount of Bonds in the Kansas
Trust are transportation revenue bonds. Payment on such bonds is dependent on
revenues from projects such as tolls on turnpikes. Therefore, payment may be
adversely affected by a reduction in revenues due to such factors as
competition from toll-free vehicular bridges and roads, increased cost of
maintenance, lower cost of alternative modes of transportation and a reduction
in the availability of fuel to motorists or significant increases in the costs
thereof.
Approximately 24% of the aggregate principal amount of the Bonds in the
Nebraska Trust are hospital revenue bonds. In view of this, an investment in
a Trust should be made with an understanding of the characteristics of such
9
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 under the Medicare program. Future legislation or changes
in the areas noted above, among other things, would affect all hospitals to
varying degrees and, accordingly, any adverse changes in these areas may
adversely affect the ability of such issuers to make payment of principal and
interest on Bonds held in the portfolio of a Trust. Such adverse changes also
may adversely affect the ratings of the Bonds held in the portfolio of a
Trust.
REPLACEMENT BONDS. Because certain of the Bonds in a Trust may from time to
time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Certificateholders and will not be reinvested, no assurance can
be given that such 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 a 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 such
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 Nebraska, as is appropriate, 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 Ratings Group, a division
of McGraw-Hill, Inc. ("Standard & Poor's" or "S&P") or "Baa3" or better by
Moody's Investors Service, Inc. Whenever a Replacement Bond has been acquired
for a Trust, the Trustee shall, within five days thereafter, notify all
Certificateholders of such 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 such Trust of the Failed Bond exceeded the cost of the Replacement
Bond plus accrued interest. Once the original corpus of such Trust is
acquired, the Trustee will have no power to vary the investment of that Trust,
i.e., such 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 such 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 such Trust) attributable to such Failed Bonds
not more than 30 days after such removal or such earlier time as the Trustee
10
in its sole discretion deems to be in the interest of the Certificateholders.
In the event a Replacement Bond should not be acquired by such Trust, the
estimated net annual interest income per Unit for such Trust would be reduced
and the Estimated Current Return and Estimated Long-Term Return thereon might
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 such Trust.
GENERAL. Certain of the Bonds in the Trusts are subject to redemption prior
to their stated maturity date pursuant to sinking fund provisions, call
provisions or extraordinary optional or mandatory redemption provisions. A
sinking fund is a reserve fund accumulated over a period of time for
retirement of debt. A callable debt obligation is one which is subject to
redemption or refunding prior to maturity at the option of 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 Portfolios" and
footnote (3) in "Notes to Trust Portfolios." See also "Portfolios" above for
possible redemptions prior to initial stated call dates. Certain of the Bonds
in the Trusts may have been purchased by a Trust at premiums over the par
value (principal amount) of such Bonds (see "Trust Portfolios"). 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 a Trust. At any time after the Date of
Deposit, litigation may be initiated on a variety of grounds with respect to
Bonds in the Trusts. Such litigation, as, for example, suits challenging the
issuance of pollution control revenue bonds under environmental protection
statutes, may affect the validity of such Bonds or the tax-free nature of the
interest thereon. While the outcome of litigation of such nature can never be
entirely predicted, the Trusts have received opinions of bond counsel to the
11
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.
OBJECTIVES OF THE TRUSTS
The Trusts have been formed to provide residents of the States of Kansas and
Nebraska interest income which is exempt from Federal income taxes, from state
income taxes when held by residents of the state where the issuers of the
Bonds in such Trust are located and, in the case of the Kansas Trust, from
local Kansas intangible personal property taxes. In addition, the Trusts also
have objectives which include conservation of capital and liquidity of
investment. There is no assurance that the Trusts' objectives will be met.
In selecting Bonds for the Trusts, 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 Trusts (see "Description of
Bond Ratings") and (b) the prices of the Bonds relative to other bonds of
comparable quality and maturity. Medium-quality Bonds (rated BBB or A by S&P
or Baa or A by Moody's) are obligations of issuers that are considered to
possess adequate, but not outstanding, capacities to service the obligations.
Investment in medium-quality debt securities involves greater investment risk,
including the possibility of issuer default or bankruptcy, than investment in
higher-quality debt securities. An economic downturn could severely disrupt
this market and adversely affect the value of outstanding bonds and the
ability of the issuers to repay principal and interest. During a period of
adverse economic changes, including a period of rising interest rates, issuers
of such bonds may experience difficulty in servicing their principal and
interest payment obligations. Medium quality debt securities tend to be less
marketable than higher-quality debt securities because the market for them is
less broad. During periods of thin trading in these markets, the spread
between bid and asked prices is likely to increase significantly, and a Trust
may have greater difficulty selling the medium-quality debt securities in its
portfolio. 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").
Each Trust consists of a portfolio of fixed rate, long-term debt obligations.
An investment in a Trust should be made with an understanding of the risks
associated with an investment in such obligations. Fluctuations in interest
rates may cause corresponding fluctuations in the value of the Bonds in 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
Returns and the Estimated Long-Term Returns 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
12
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 Returns will be realized in the future. Estimated
Long-Term Return is calculated using a formula which 1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trusts and 2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
retirements of the Securities and the expenses of a Trust will change, there
is no assurance that the present Estimated Long-Term Returns 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 Trusts, 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 Trusts are offered at the Public Offering Price which during the
initial public offering period is based on the offering prices of the Bonds in
a 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 be the earlier of the sale to the public of all
the Units in a Trust or 30 days from the date of this Prospectus; provided,
however, the Sponsor reserves the right to extend this period for three
successive 30 day periods. 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>
13
Any reduced sales charge shall be the responsibility of the selling dealer.
The reduced sales charge will apply on all purchases of Units in a 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.
Although payment is normally made five business days following the order for
purchase, payment may be made prior thereto. A person will become the owner
of Units on the date of settlement provided payment has been received. Cash,
if any, made available to the Sponsor prior to the date of settlement for the
purchase of Units may be used in the Sponsor's business and may be deemed to
be a benefit to the Sponsor, subject to the limitations of the Securities
Exchange Act of 1934.
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 Trusts available to their
customers on an agency basis. A portion of the sales charge paid by their
customers is retained by or remitted to the banks in an amount allowing a
concession equal to that shown above for dealers. Under the Glass-Steagall
Act, banks are prohibited from underwriting Trust Units; however, the Glass-
Steagall Act does permit certain agency transactions and the banking
regulators have indicated that these particular agency transactions are
permitted under such Act.
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 is the accumulation of unpaid interest on a bond from the
last day on which interest thereon was paid. Interest on Bonds in the Trusts
is paid to the Trustee either monthly or semi-annually. However, interest on
the Bonds in the Trusts is accounted for daily on an accrual basis. Because
of this, each 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
a Trust the amount, if any, of accrued interest paid on their Units.
14
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.
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 a 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
seventh calendar day following such tender, or if the seventh calendar day is
not a business day, on the first business day prior thereto, the
Certificateholder will be entitled to receive in cash for each Unit tendered
an amount equal to the redemption price per Unit as next computed after
receipt by the Trustee of such tender of Units as determined by the bid price
of the Bonds in 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 for the applicable Trust, or if the balance therein is insufficient,
from the Principal Account for the applicable Trust. 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 such 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").
15
To the extent that Bonds in the portfolio of a Trust are sold to meet
redemptions, the size and diversity of such Trust will be reduced. Such sales
may occur at a time when Bonds might not otherwise be sold which may result in
lower prices received on the Bonds than might be realized under normal trading
conditions.
Under regulations issued by the Internal Revenue Service, the Trustee will be
required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming
Certificateholder's tax identification number in the manner required by such
regulations. Any amount so withheld is transmitted to the Internal Revenue
Service and may be recovered by the Certificateholder only when filing his or
her tax return. Under normal circumstances the Trustee obtains the
Certificateholder's tax identification number from the selling broker at the
time the certificate is issued, and this number is printed on the certificate
and on distribution statements. If a Certificateholder's tax identification
number does not appear on the certificate or statements, or if it is
incorrect, the Certificateholder should contact the Trustee before presenting
a certificate for redemption to determine what action, if any, is required to
avoid this back-up withholding.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or during which the Securities and Exchange
Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the Bonds is
not reasonably practicable, or for such other periods as the Securities and
Exchange Commission may by order permit.
The Trustee shall notify the Sponsor of any tender of Units for redemption.
If the Sponsor's repurchase price in the secondary market at that time equals
or exceeds the redemption price, it may 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 such 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 a Trust
are expected to be less than the related aggregate offering prices. A
Certificateholder who wishes to dispose of his Units should inquire of his
broker as to current market prices in order to determine whether there is in
existence any price in excess of the redemption price and, if so, the amount
thereof.
16
DISTRIBUTION OF INTEREST AND PRINCIPAL
Interest received by a Trust, including that part of the proceeds from the
disposition of Bonds, if any, which represents accrued interest, is credited
by the Trustee to the Interest Account for such Trust. Any other receipts are
credited to the Principal Account for such Trust. Interest received by a
Trust after deduction of amounts sufficient to reimburse the Trustee, without
interest, for any amounts advanced and paid to the Sponsor as the
Certificateholder of record as of the First Settlement Date 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 a Trust
after each record date and prior to the following distribution date will be
held in the Principal Account and not distributed until the next distribution
date. The Trustee is not required to pay interest on funds held in the
Principal or Interest Accounts (but may itself earn interest thereon and
therefore benefit from the use of such funds) nor to make a distribution from
the Principal Account unless the amount available for distribution shall equal
at least $1.00 per Unit.
The distribution to the Certificateholders as of each record date 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 Trusts at a constant rate throughout the year, such interest distribution
may be more or less than the amount credited to the Interest Account as of the
record date. For the purpose of minimizing fluctuations in the distributions
from the Interest Account, the Trustee is authorized to advance such amounts
as may be necessary to provide interest distributions of approximately equal
amounts. The Trustee shall be reimbursed, without interest, for any such
advances from funds in the Interest Account on the ensuing record date. A
person who purchases Units will commence receiving distributions only after
such person becomes a record owner. Notification to the Trustee of the
transfer of Units is the responsibility of the purchaser, but in the normal
course of business such notice is provided by the selling broker/dealer.
As of the fifteenth day of each month, the Trustee will deduct from the
Interest Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of a Trust (see
"Expenses of the 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 such Trust. Amounts so
withdrawn will not be considered a part of such 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 Portfolios" and "Redemption and Repurchase of Units").
Funds which are available for future distributions, redemptions and payment of
expenses are held in accounts which are non-interest bearing to
Certificateholders and are available for use by the Trustee pursuant to normal
banking procedures.
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DISTRIBUTION REINVESTMENT OPTION
The Sponsor has entered into arrangements with Ranson Managed Portfolios - The
Kansas Municipal Fund (the "Kansas Municipal Fund), Ranson Managed Portfolios
- - The Kansas Insured Municipal Fund-Limited Maturity (the "Kansas Insured
Municipal Fund) and Ranson Managed Portfolios - The Nebraska Municipal Fund
which permit any Certificateholder of the Kansas Trust or Nebraska Trust to
elect to have each distribution of interest income or principal, including
capital gains, on his Units automatically reinvested in shares of the Kansas
Municipal Fund or the Kansas Insured Municipal for Kansas investors or in
shares of the Nebraska Municipal Fund for Nebraska investors. The investment
objective of the Kansas Municipal Fund, the Kansas Insured Municipal Fund and
the Nebraska Municipal Fund is to provide its shareholders with as high a
level of current income exempt from both federal income tax and either Kansas
or Nebraska income tax, respectively, as is consistent with preservation of
capital. The objectives and policies of the Kansas Municipal Fund, the Kansas
Insured Municipal Fund and the Nebraska Municipal Fund are presented in more
detail in the Kansas Municipal Fund, the Kansas Insured Municipal Fund and the
Nebraska Municipal Fund prospectuses, respectively. Certificateholders should
contact the broker from whom they obtained this Prospectus to obtain a current
prospectus for the Kansas Municipal Fund, the Kansas Insured Municipal Fund
and the Nebraska Municipal Fund, or they may obtain a current prospectus by
contacting Ranson Capital Corporation at (800) 345-2363.
Certificateholders will be able to reinvest their distributions of interest
income or principal in the Kansas Municipal Fund, the Kansas Insured Municipal
Fund or the Nebraska Municipal Fund with no sales charge and no minimum
investment.
A Certificateholder may at any time, by so notifying the Trustee in writing,
elect to terminate his participation in the Distribution Reinvestment Option
and receive future distributions on his Units in cash. There will be no
charge or other penalty for such termination. The Sponsor, the Kansas
Municipal Fund, the Kansas Insured Municipal Fund and the Nebraska Municipal
Fund each have the right to terminate the Distribution Reinvestment Option, in
whole or in part.
TAX STATUS (FEDERAL, STATE, CAPITAL GAINS)
At the respective times of issuance of the Bonds, opinions relating to the
validity thereof, to the exemption of interest thereon from Federal, from
state income taxation when held by residents of the state where the issuers of
the Bonds in such Trust are located and, in the case of the Kansas Trust, to
the exemption from local Kansas intangible personal property taxes were
rendered by bond counsel to the respective issuing authorities. Gain realized
on the sale or redemption of the Bonds by the Trustee or of a Unit by a
Certificateholder is, however, includable in gross income for Federal and
state income tax purposes. It should 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 a 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 Trusts of the
proceedings relating to the issuance of the Bonds or of the bases for such
opinions.
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In the opinion of Chapman and Cutler, counsel for the Sponsor, under existing
law:
1) each Trust is not an association taxable as a corporation for Federal
income tax purposes and interest and accrued original issue discount on the
Bonds which is excludable from gross income under the Internal Revenue Code of
1986 (the "Code") will retain its status when distributed to
Certificateholders. A Certificateholder's share of the interest on certain
Bonds in each Trust will be included as an item of tax preference for both
individuals and corporations subject to the alternative minimum tax ("AMT
Bonds"). In the case of certain corporations owning Units, interest and
accrued original issue discount with respect to Bonds other than AMT Bonds
held by a Trust may be subject to the alternative minimum tax, an additional
tax or 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 respective Trust under subpart E, subchapter J of Chapter 1 of
the Code and will have a taxable event when such Trust disposes of a Bond or
when the 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
19
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 minimus
rule. Under the Tax Act, accretion of market discount is taxable as ordinary
income; under prior law the accretion had been treated as capital gain.
Market discount that accretes while a Trust holds a Bond would be recognized
as ordinary income by the Certificateholders when principal payments are
received on the Bond, upon sale or at redemption (including early redemption)
or upon the sale 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 a Trust will be
treated as an item of tax preference for purposes of computing the alternative
minimum tax of all Certificateholders of such Trust, including individuals.
As a result, such interest income may be subject to the alternative minimum
tax. Such Trust will annually supply Certificateholders with information
regarding the amount of Trust income attributable to those "specified private
activity bonds" held by such Trust that give rise to a specific item of tax
preference. Certificateholders should consult their tax adviser regarding the
potential application of the alternative minimum tax and the impact of a
portion of the Trust's income being characterized as a tax preference.
For purposes of computing the alternative minimum tax for individuals and
corporations and the Superfund Tax for corporations, interest on certain
private activity bonds (which includes most industrial and housing revenue
bonds) issued on or after August 8, 1986 such as the AMT Bonds, is included as
an item of tax preference.
In the case of corporations, for taxable years beginning after December 31,
1986, the alternative minimum tax and the Superfund Tax depend upon the
corporation's alternative minimum taxable income, which is the corporation's
taxable income with certain adjustments. One of the adjustment items used in
computing the alternative minimum taxable income and the Superfund Tax of a
corporation (other than an S Corporation, Regulated Investment Company, Real
Estate Investment Trust, or REMIC) is an amount equal to 75% of the excess of
such corporation's "adjusted current earnings" over an amount equal to its
alternative minimum taxable income (before such adjustment item and the
alternative tax net operating loss deduction). "Adjusted current earnings"
includes all tax exempt interest, including interest on the Bonds in a Trust.
Corporate Certificateholders are urged to consult their tax advisers with
respect to the particular tax consequences to them, including the corporate
alternative minimum tax, Superfund Tax and the branch profits tax imposed by
Section 884 of the Code.
The Code provides that interest on indebtedness incurred or continued to
purchase or carry obligations, the interest on which is wholly exempt from
Federal income taxes, is not deductible. Because each Certificateholder is
treated for Federal income tax purposes as the owner of a pro rata share of
the Bonds owned by a Trust, interest on borrowed funds used to purchase or
carry Units of such Trust will not be deductible for Federal income tax
purposes. Under rules used by the Internal Revenue Service for determining
when borrowed funds are considered used for the purpose of purchasing or
carrying particular assets, the purchase of Units may be considered to have
been made with borrowed funds even though the borrowed funds are not directly
traceable to the purchase of Units. However, these rules generally do not
apply to interest paid on indebtedness incurred for expenditures of a personal
nature such as a mortgage incurred to purchase or improve a personal
20
residence. Federally tax-exempt income, including income on Units of a Trust,
will be taken into consideration in computing the portion, if any, of social
security benefits received that will be included in a taxpayer's gross income
subject to Federal income tax. It should be noted that under the Tax Act, the
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 Trusts, the opinions of bond
counsel indicate that interest on such securities received by a "substantial
user" of the facilities being financed with the proceeds of these securities,
or persons related thereto, for periods while such securities are held by such
a user or related person, will not be excludable from Federal gross income,
although interest on such securities received by others would be excludable
from Federal gross income. "Substantial user" and "related person" are
defined under U.S. Treasury Regulations. Any person who believes that he or
she may be a "substantial user" or a "related person" as so defined should
contact his or her tax adviser.
KANSAS TAXATION. 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 Kansas Trust is not an association taxable as a corporation for Kansas
income tax purposes;
Each Certificateholder of the Kansas Trust will be treated as the owner of a
pro rata portion of the Kansas Trust, and the income and deductions of the
Kansas Trust will therefore be treated as income of the Certificateholder
under Kansas law;
Interest on Bonds issued after December 31, 1987 by the State of Kansas or any
of its political subdivisions will be exempt from income taxation imposed on
individuals, corporations and fiduciaries (other than insurance companies,
banks, trust companies or savings and loan associations) however, interest on
Bonds issued prior to January 1, 1988 by the State of Kansas or any of its
political subdivisions will not be exempt from income taxation imposed on
individuals, corporations and fiduciaries (other than insurance companies,
banks, trust companies or savings and loan associations) unless the laws of
the State of Kansas authorizing the issuance of such Bonds specifically exempt
the interest on the Bonds from income taxation by the State of Kansas;
Interest on Bonds issued by the State of Kansas or any of its political
subdivisions will be subject to the tax imposed on banks, trust companies and
savings and loan associations under Article 11, Chapter 79 of the Kansas
statutes;
21
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 Kansas
Trust will continue to be exempt when distributed to a Certificateholder
(other than a bank, trust company or savings and loan association);
Each Certificateholder of the Kansas Trust will recognize gain or loss for
Kansas income tax purposes if the Trustee disposes of a Bond (whether by sale,
exchange, payment on maturity, retirement or otherwise) or if the
Certificateholder redeems or sells Units of the Kansas Trust to the extent
that such transaction results in a recognized gain or loss for federal income
tax purposes;
Interest received by the Kansas 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 intangible taxation imposed by counties, cities and
townships pursuant to present Kansas law.
NEBRASKA TAXATION. With respect to certain Bonds in the Nebraska Trust (the
"Nebraska Bonds") which may be held by the Nebraska Trust, the opinions of
bond counsel to the issuing authorities for such Bonds have indicated that the
interest on such Bonds is included in computing the Nebraska Alternative
Minimum Tax imposed by Section 77-2715 (2) of the Revised Nebraska Statutes
(the "Nebraska Minimum Tax") (the "Nebraska AMT Bonds"). However, although no
opinion is expressed herein regarding such matters, it is assumed that: (i)
the Bonds were validly issued, (ii) the interest thereon is excludable from
gross income for Federal income tax purposes, (iii) none of the Bonds (other
than the Nebraska AMT Bonds, if any) are "specified private activity bonds"
the interest on which is included as an item of tax preference in the
computation of the Alternative Minimum Tax for federal income tax purposes,
(iv) interest on the Nebraska Bonds (other than the Nebraska AMT Bonds, if
any), if received directly by a Certificateholder, would be exempt from both
the Nebraska income tax, imposed by Section 77-2714 et. seq. of the Revised
Nebraska Statutes (other than the Nebraska Minimum Tax) (the "Nebraska State
Income Tax") and the Nebraska Minimum Tax imposed by Section 77-2715 (2) of
the Revised Nebraska Statutes (the "Nebraska Minimum Tax") and (v) interest on
the Nebraska AMT Bonds, if any, if received directly by a Certificateholder,
would be exempt from the Nebraska State Income Tax. The opinion set forth
below does not address the taxation of persons other than full time residents
of Nebraska.
In the opinion of Chapman and Cutler under existing law as of the date of this
Prospectus and based upon the assumptions set forth above:
(1) The Nebraska Trust is not an association taxable as a corporation, each
Certificateholder of the Nebraska Trust will be treated as the owner of a pro
rata portion of the Nebraska Trust, and the income of such portion of the
Nebraska Trust will therefore be treated as the income of the
Certificateholder for both Nebraska State Income Tax and the Nebraska Minimum
Tax purposes;
(2) Interest on the Bonds which is exempt from both the Nebraska State
Income Tax and the Nebraska Minimum Tax when received by the Nebraska Trust,
and which would be exempt from both the Nebraska State Income Tax and the
22
Nebraska Minimum Tax if received directly by a Certificateholder, will retain
its status as exempt from such taxes when received by the Nebraska Trust and
distributed to a Certificateholder;
(3) Interest on the Nebraska AMT Bonds, if any, which is exempt from the
Nebraska State Income Tax but is included in the computation of the Nebraska
Minimum Tax when received by the Nebraska Trust, and which would be exempt
from the Nebraska State Income Tax but would be included in the computation of
the Nebraska Minimum Tax if received directly by a Certificateholder, will
retain its status as exempt from the Nebraska State Income Tax but included in
the computation of the Nebraska Minimum Tax when received by the Nebraska
Trust and distributed to a Certificateholder;
(4) To the extent that interest derived from the Nebraska Trust by a
Certificateholder with respect to any Possession Bonds is excludable from
gross income for Federal income tax purposes pursuant to 48 U.S.C.
Section 745, 48 U.S.C. Section 1423 and 48 U.S.C. Section 1403, such
interest will not be subject to either the Nebraska State Income Tax or
the Nebraska Minimum Tax;
(5) Each Certificateholder of the Nebraska Trust will recognize gain or
loss for both Nebraska State Income Tax and Nebraska Minimum Tax purposes if
the Trustee disposes of a Bond (whether by redemption, sale or otherwise) or
if the Certificateholder redeems or sells Units of the Nebraska Trust to the
extent that such a transaction results in a recognized gain or loss to such
Certificateholder for Federal income tax purposes;
(6) The Nebraska Sate Income Tax does not permit a deduction for interest
paid or incurred on indebtedness incurred or continued to purchase or carry
Units in the Nebraska Trust, the interest on which is exempt from such Tax,
and
(7) In the case of a Certificateholder subject to the Nebraska financial
institutions franchise tax, the income derived by such Certificateholder from
his pro rata portion of the Bonds held by the Nebraska Trust may affect the
determination of such Certificateholder's maximum franchise tax.
Chapman and Cutler has not examined any of the Bonds to be deposited and held
in the Nebraska Trust or the proceedings for the issuance thereof or the
opinions of bond counsel with respect thereto, and therefore express no
opinion as to the exemption from either the Nebraska State Income Tax or the
Nebraska Minimum Tax of interest on the Nebraska Bonds if received directly by
a Certificateholder.
MISSOURI TAXATION. In the opinion of Chapman and Cutler, under Missouri law,
as presently enacted and construed:
(i) Each Trust is not an association taxable as a corporation for Missouri
income tax purposes.
(ii) The Certificateholders of each Trust will be treated as the owners of
a pro rata portion of such Trust and the income of such Trust will therefore
be treated as income of the Certificateholders under Missouri law.
(iii) Each Trust will not be subject to the Kansas City, Missouri Earnings
and Profits Tax and each Certificateholder's share of a 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).
23
All statements of law in the Prospectus concerning exemption from Federal,
state or other taxes are the opinion of counsel and are to be so construed.
EXPENSES OF THE TRUSTS
The Sponsor has borne the costs of establishing the Trusts, 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 Trusts. The Sponsor will not receive
any fees in connection with activities relating to the Trusts. However, for
regularly evaluating the portfolio of the Trusts, 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 related Trust at any time during such period. This fee
may exceed the actual costs of providing such evaluation services for the
Trusts, but at no time will the total amount received for evaluation services
rendered to unit investment trusts 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 that annual fee set forth under
"Summary of Essential Financial Information", which fee is based on the
largest aggregate amount of Bonds in the related 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
Trusts 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 Trusts which, when owed to the
Trustee, are secured by a lien on the assets of the applicable Trust: 1) the
expenses and costs of any action undertaken by the Trustee to protect the
Trusts and the rights and interests of the Certificateholders; 2) any taxes
and other governmental charges upon the Bonds or any part of a Trust (no such
taxes or charges are currently being levied, or, to the knowledge of the
Sponsor, contemplated); 3) amounts payable to the Trustee as fees for ordinary
recurring services and for extraordinary non-recurring services rendered
pursuant to the Indenture and all disbursements and expenses including counsel
fees (including fees of counsel which the Trustee may retain) and auditing
fees sustained or incurred by the Trustee in connection therewith; and 4) any
losses or liabilities accruing to the Trustee without negligence, bad faith or
willful misconduct on its part. The Trustee is empowered to sell Bonds from a
Trust in order to pay these amounts if funds are not available in the Interest
and Principal Accounts for such Trust. 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.
24
EVALUATION OF THE TRUSTS
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 each
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 a Trust has
been and will be determined on the basis of cash on hand in such Trust or
money in the process of being collected, the value of the Bonds in the
portfolio of such 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 such 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 such Trust.
The Evaluator may determine the value of the Bonds in the portfolio of a Trust
1) on the basis of current bid prices of the Bonds obtained from dealers or
brokers who customarily deal in bonds comparable to those held in such 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 a Trust plus the applicable sales charge and accrued interest.
The offering price of Bonds in the portfolio of a 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 evaluations of the Bonds in the portfolios of the
Trusts were higher than the bid side evaluations of such Bonds by 1.2% and
1.0% of the aggregate principal amount of such Bonds for the Kansas Trust and
the Nebraska Trust, respectively.
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 of a Trust a
25
statement 1) as to the Interest Account for such Trust; interest received
(including amounts representing interest received upon any disposition of
Bonds), deductions for fees and expenses of such 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 for such Trust: 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 each Trust to be audited on an annual basis at the
expense of such Trust by independent auditors selected by the Sponsor, unless
the Sponsor determines that such an audit would not be in the best interest of
the Certificateholders. Certificateholders may obtain a copy of any such
audited financial statements upon written 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 related Trust furnished to it by the Evaluator.
The Trustee is authorized to treat as the record owner of Units that person
who is registered as such owner on the books of the Trustee. Ownership of
Units of a Trust is evidenced by separate registered certificates executed by
the Trustee and the Sponsor. Certificates are transferable by presentation
and surrender to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Certificateholder must sign exactly
as his name appears on the face of the certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or such other signature guarantee program in addition to, or
in substitution for, STAMP, as may be accepted by the Trustee. In certain
instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority. Certificates will be
issued in denominations of one Unit or any multiple thereof. Destroyed,
stolen, mutilated or lost certificates will be replaced upon delivery to the
Trustee of satisfactory indemnity, evidence of ownership and payment of
expenses incurred. Mutilated certificates must be surrendered to the Trustee
for replacement. Although no such charge is now made or contemplated, the
Trustee may require a Certificateholder to pay a reasonable fee to be
determined by the Trustee for each certificate reissued or transferred and to
pay any governmental charge that may be imposed in connection with each such
transfer or interchange.
SPONSOR INFORMATION
Ranson 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 Trusts. Ranson &
26
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 located at 120 South Market, Suite 450, Wichita,
Kansas 67202. As of March 31, 1995, the total unaudited stockholders' equity
of Ranson Capital Corporation was $886,440. (This paragraph relates only to
the Sponsor and not to any Series of The Ranson Municipal 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 a Trust
(which is based on the aggregate offering price of the Bonds in the portfolio
of such Trust on the Date of Deposit as determined by Stern Brothers & Co.).
See "Trust Portfolios." The Sponsor may also realize profits or sustain
losses with respect to Bonds deposited in a Trust which were acquired by the
Sponsor from underwriting syndicates of which it was a member. The Sponsor
has not participated as sole underwriter or as manager or as a member of the
underwriting syndicate on any of the Bonds in the Kansas Trust or the Nebraska
Trust. 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 a 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 Trusts. 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 Trusts 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
amounts prescribed by the Securities and Exchange Commission, (ii) terminate
the Indenture and liquidate the Trusts as provided therein or (iii) continue
to act as Trustee without terminating the Indenture.
27
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 portfolios. The Trustee
is empowered to sell, for the purpose of redeeming Units tendered by any
Certificateholder and for the payment of expenses for which funds may not be
available, such of the Bonds as are designated by the Sponsor as the Trustee
in its sole discretion may deem necessary. The Sponsor is empowered, but not
obligated, to direct the Trustee to dispose of Bonds upon default in payment
of principal or interest, institution of certain legal proceedings, default
under other documents adversely affecting debt service, default in payment of
principal or interest on other obligations of the same issuer, decline in
projected income pledged for debt service on revenue bonds or decline in price
or the occurrence of other market or credit factors, including advance
refunding (i.e., the issuance of refunding securities and the deposit of the
proceeds thereof in trust or escrow to retire the refunded securities on their
respective redemption dates), so that in the opinion of the Sponsor the
retention of such Bonds would be detrimental to the interest of the
Certificateholders. The Sponsor is required to instruct the Trustee to reject
any offer made by an issuer of any of the Bonds to issue new obligations in
exchange or substitution for any Bond pursuant to a refunding or refinancing
plan, except that the Sponsor may instruct the Trustee to accept or reject
such an offer or to take any other action with respect thereto as the Sponsor
may deem proper if (1) the issuer is in default with respect to such Bond or
(2) in the written opinion of the Sponsor the issuer will probably default
with respect to such Bond in the reasonably foreseeable future. Any
obligation so received in exchange or substitution will be held by the Trustee
subject to the terms and conditions of the Indenture to the same extent as
Bonds originally deposited thereunder. Within five days after the deposit of
obligations in exchange or substitution for underlying Bonds, the Trustee is
required to give notice thereof to each Certificateholder, identifying the
Bonds eliminated and the Bonds substituted therefor. Except as stated herein
and under "Description of Trust Portfolios" regarding the substitution of
Replacement Bonds for Failed Bonds, the acquisition by a Trust of any
securities other than the Bonds initially deposited is not permitted.
If any default in the payment of principal or interest on any Bond occurs and
no provision for payment is made therefor within 30 days, the Trustee is
required to notify the Sponsor thereof. If the Sponsor fails to instruct the
Trustee to sell or to hold such Bond within 30 days after notification by the
Trustee to the Sponsor of such default, the Trustee may in its discretion sell
the defaulted Bond and not be liable for any depreciation or loss thereby
incurred.
In accordance with the Indenture, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trusts. Such
records shall include the name and address of, and the certificates issued by
each Trust to, every Certificateholder of such 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
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 each Trust.
28
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 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>
KANSAS NEBRASKA
TRUST TRUST
NAME ADDRESS UNITS UNITS
________ ___________ _________ _________
<S> <C> <C> <C>
Ranson Capital Corporation 120 S. Market, Suite 450 1,265 2,100
Wichita, Kansas 67202
Edward D. Jones & Co. 201 Progress Parkway 1,500 500
Maryland Heights, Missouri 63043
B. C. Christopher 4717 Grand Avenue 100
Division of Fahnestock & Co., Inc. Kansas City, Missouri 64112
A. G. Edwards & Sons, Inc. One North Jefferson 100
St. Louis, Missouri 63013
Fidelity Capital Markets, 164 Northern Avenue, zt3 100
a Division of National Financial Boston, MA 02210
Services Corporation
Raymond James & Associates, Inc. 880 Carillon Parkway 100
St. Petersburg, FL 33710
</TABLE>
29
Underwriters and broker-dealers of the Trusts 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 Trusts. Such payments are made by the Sponsor
out of its own assets, and not out of the assets of the Trusts. These
programs will not change the price Certificateholders pay for their Units or
the amount that the Trusts 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 2,000 or
more Units.
LEGAL AND AUDITING MATTERS
The legality of the Units offered hereby and certain matters relating to
Federal, Kansas and Nebraska tax law have been passed upon by Chapman and
Cutler, Chicago, Illinois as special counsel for the Sponsor.
The statements of net assets, including the Trust portfolios, of the Trusts at
the opening of business on April 11, 1995, the Date of Deposit, appearing in
this Prospectus and Registration Statement have been audited by Allen, Gibbs &
Houlik, L.C., independent auditors, as set forth in their report appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
DESCRIPTION OF BOND RATINGS
STANDARD & POOR'S RATINGS GROUP, A DIVISION OF MCGRAW-HILL, INC. A
description of the applicable Standard & Poor's rating symbols and their
meanings follows:
30
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
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
31
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
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.
32
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 tables show 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 State tax rates scheduled to be in effect*.
These tables incorporate 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>
KANSAS
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>
<TABLE>
<CAPTION>
NEBRASKA
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 $ 0 - 39.00 19.50 5.59 6.21 6.83 7.45 8.07 8.70 9.32
23.35- 56.55 39.00 - 94.25 33.00 6.72 7.46 8.21 8.96 9.70 10.45 11.19
56.55- 117.95 94.25- 143.60 35.80 7.01 7.79 8.57 9.35 10.12 10.90 11.68
117.95- 256.50 143.60- 256.50 40.50 7.56 8.40 9.24 10.08 10.92 11.76 12.61
Over 256.50 Over 256.50 43.80 8.01 8.90 9.79 10.68 11.57 12.46 13.35
</TABLE>
[FN]
* The tables do 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 Trusts 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 Trusts. 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 Trusts
are described more fully elsewhere in this Prospectus.
34
REPORT OF ALLEN, GIBBS & HOULIK, L.C.
INDEPENDENT AUDITORS
CERTIFICATEHOLDERS
THE RANSON MUNICIPAL TRUST
MULTI-STATE SERIES 5 (THE KANSAS TAX-EXEMPT TRUST, SERIES 74 AND THE NEBRASKA
TAX-EXEMPT TRUST, SERIES 5):
We have audited the accompanying statements of net assets, including the
Trust portfolios, of The Ranson Municipal Trust, Multi-State Series 5 (The
Kansas Tax-Exempt Trust, Series 74 and The Nebraska Tax-Exempt Trust, Series
5), as of the opening of business on April 11, 1995, the Date of Deposit.
These statements of net assets are the responsibility of the Trusts' Sponsor.
Our responsibility is to express an opinion on these statements 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 statements of net assets are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statements of net
assets. Our procedures included confirmation of the Bonds held by the Trustee
at the opening of business on April 11, 1995. An audit also includes
assessing the accounting principles used and significant estimates made by the
Trusts' Sponsor, as well as evaluating the overall statements of net assets
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the statements of net assets referred to above present
fairly, in all material respects, the financial position of The Ranson
Municipal Trust, Multi-State Series 5 (The Kansas Tax-Exempt Trust, Series 74
and The Nebraska Tax-Exempt Trust, Series 5) at the opening of business on
April 11, 1995, in conformity with generally accepted accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
April 11, 1995
<TABLE>
THE RANSON MUNICIPAL TRUST
<CAPTION>
MULTI-STATE SERIES 5
STATEMENTS OF NET ASSETS
AT THE OPENING OF BUSINESS ON APRIL 11, 1995, THE DATE OF DEPOSIT
<S> <C> <C>
TRUST PROPERTY KANSAS NEBRASKA
Investment in securities- TRUST TRUST
Bonds deposited in Trust (1) $ 3,007,097 $ 2,471,832
Accrued interest to Date of Deposit on Bonds (2) 45,451 31,471
____________ ____________
3,052,548 2,503,303
Less distributions payable (2) 45,451 31,471
____________ ____________
Net assets, applicable to outstanding Units of
fractional undivided interest $ 3,007,097 $ 2,471,832
INTEREST OF CERTIFICATEHOLDERS
Cost to investors (3) $ 3,162,036 $ 2,599,192
Less sales charge (3) 154,939 127,360
____________ ____________
Net proceeds to the Trust, equal to net assets $ 3,007,097 $ 2,471,832
</TABLE>
[FN]
NOTES:
(1) Aggregate cost to the Trusts of the Bonds listed in the Trust
Portfolios 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 $49,566 and $34,829 for the Kansas Trust and the Nebraska Trust,
respectively, representing the accrued interest to April 19, 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.
35
<TABLE>
THE KANSAS TAX-EXEMPT TRUST, SERIES 74
TRUST PORTFOLIO AT THE OPENING OF BUSINESS ON APRIL 11, 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>
$ 145,000 Unified School District No. 340, Jefferson County, AAA 2004 @ 100 $ 152,273
Kansas General Obligation Bonds, Series 1994
(Capital Guaranty Insured) 6.45%, Due 9/1/2012
@@ 500,000 Unified School District No. 356, Sumner County, AAA 2005 @ 100 498,125
Kansas (Conway Springs) General Obligation
Bonds, Series 1995 (MBIA Insured) 5.75%, Due
9/1/2015
125,000 Reno County, Kansas Labette County, Kansas Single Aaa# Noncallable 35,450(6)
Family Mortgage Revenue Bonds (Multiple
Originator and Servicers) 1983 Series A (AMBAC
Insured) 0.00%, Due 12/1/2015
@@ 700,000 Kansas Turnpike Authority Turnpike Revenue AAA 2003 @ 102 652,029
Bonds, Series 1993 (AMBAC Insured) 5.25%, Due 2005 @ 100
9/1/2017
@@ 600,000 City of Kansas City, Kansas Utility System AAA 2004 @ 102 623,346
Refunding and Improvement Revenue Bonds, Series 2006 @ 100
1994 (FGIC Insured) 6.375%, Due 9/1/2023
475,000 City of Olathe, Kansas and Labette County, Kansas Aaa# 2005 @ 105 509,609
Collateralized Single Family Mortgage Refunding 2009 @ 100
Revenue Bonds Series 1994 C-1, 7.80%, Due
2/1/2025
@@ 500,000 City of Burlington, Kansas Pollution Control AAA 2001 @ 102 536,265
Refunding Revenue Bonds, Series 1991 (Kansas 2005 @ 100
Gas and Electric Company) (MBIA Insured) 7.00%,
Due 6/1/2031
___________ ___________
$3,045,000 $3,007,097
</TABLE>
See "Notes to Trust Portfolios."
36
<TABLE>
THE NEBRASKA TAX-EXEMPT TRUST, SERIES 5
TRUST PORTFOLIO AT THE OPENING OF BUSINESS ON APRIL 11, 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>
$@@ 500,000 City of Lincoln, Nebraska Electric System Revenue AA 2003 @ 102 $ 464,515
Refunding Bonds, 1993 Series A, 5.25%, Due 2005 @ 100 S.F.
9/1/2015
@@ 440,000 Nebraska Public Power District Power Supply A+ 2003 @ 102 391,824
System Revenue Bonds, 1993 Series, 5.00%, Due 2005 @ 100
1/1/2017
@@ 210,000 Omaha Public Power District (Nebraska) Electric AA 2003 @ 102 202,241
System Revenue Bonds, 1993 Series C, 5.50%, Due 2005 @ 100
2/1/2017
250,000 Nebraska Investment Finance Authority Single AAA 2005 @ 102 260,470
Family Housing Revenue Bonds 1994 Series C-1, 2013 @ 100 S.F.
7.05%, Due 9/1/2017
600,000 Hospital Authority No. 1 of Lancaster County, AAA 2002 @ 102 644,412
Nebraska Hospital Revenue Bonds (Bryan Memorial 2004 @ 100 S.F.
Project) Series 1992 (MBIA Insured) 6.70%, Due
6/1/2022
## 500,000 Nebraska Investment Finance Authority Single AAA 2005 @ 101.5 508,370
Family Housing Revenue Bonds 1995 Series A, 2019 @ 100 S.F.
6.70%, Due 9/1/2026
___________ ___________
$2,500,000 $2,471,832
</TABLE>
See "Notes to Trust Portfolios."
37
[FN]
NOTES TO TRUST PORTFOLIOS:
(1) Contracts to acquire Bonds were entered into by the Sponsor during the
period February 15, 1995 through April 7, 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
Investors Service, Inc. or unless marked with a "&&" in which case the Sponsor
expects Standard & Poor's, or Moody's Investors Service, Inc., 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
Trusts. "**" 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 Trusts. In
addition, certain Bonds in the Trust portfolios 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 Trusts, 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
_____________ ________ ______________ _____________
<S> <C> <C> <C> <C>
Kansas Trust $2,964,712 $42,385 $185,153 $2,972,854
Nebraska Trust $2,446,065 $25,767 $151,125 $2,446,330
</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 Kansas Trust are "zero coupon" bonds. None of the
aggregate principal amount of Bonds in the Nebraska Trust are "zero coupon"
bonds.
38
(7) None of the aggregate principal amount of the Bonds in the Kansas Trust
is subject to the alternative minimum tax. Approximately 20% of the aggregate
principal amount of the Bonds in the Nebraska Trust is subject to the
alternative minimum tax. The interest income from each such Bond will be
treated as an item of tax preference for purposes of computing the alternative
minimum tax of all Certificateholders of the Nebraska Trust. Each such Bond
is identified in the portfolio with a "##."
%% 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 Certificateholders on the date of delivery.
39
ESTIMATED CASH FLOWS TO CERTFICATEHOLDERS
The tables below set forth the per Unit estimated monthly distribution of
interest and principal to Certificateholders. The tables assume 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>
KANSAS TRUST
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
__________________ ____________ ____________ ____________
<S> <C> <C> <C>
June 1995 $4.01 $ 0.00 $ 4.01
July 1995 - May 2001 4.88 0.00 4.88
June 2001 4.88 161.14 166.02
July 2001 - August 2004 3.95 0.00 3.95
September 2004 3.95 45.81 49.76
October 2004 - August 2006 3.71 0.00 3.71
September 2006 3.71 189.57 193.28
October 2006 - July 2009 2.70 0.00 2.70
August 2009 2.70 150.08 152.78
September 2009 - August 2015 1.72 0.00 1.72
September 2015 1.72 157.98 159.70
October 2015 - November 2015 0.97 0.00 0.97
December 2015 0.97 39.49 40.46
January 2016 - August 2017 0.97 0.00 0.97
September 2017 0.97 221.17 222.14
</TABLE>
<TABLE>
KANSAS TRUST
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
__________________ ____________ ____________ ____________
<S> <C> <C> <C>
June 1995 $4.00 $ 0.00 $ 4.00
July 1995 - May 2004 4.84 0.00 4.84
June 2004 4.84 230.77 235.61
July 2004 - February 2007 3.56 0.00 3.56
March 2007 3.56 288.46 292.02
April 2007 - August 2015 1.92 0.00 1.92
September 2015 1.92 192.31 194.23
October 2015 - December 2016 1.08 0.00 1.08
January 2017 1.08 169.23 170.31
February 2017 0.37 80.77 81.14
</TABLE>
40
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
Trusts, 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 Trusts and the Sponsor,
but does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Trusts have 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 Trusts 5
Description of Trust Portfolios 7
Objectives of the Trusts 12
Estimated Current Return and Estimated Long-Term Return 12
Public Offering Information 13
Accrued Interest 14
Redemption and Repurchase of Units 15
Distribution of Interest and Principal 17
Distribution Reinvestment Option 18
Tax Status (Federal, State, Capital Gains) 18
Expenses of the Trusts 24
Evaluation of the Trusts 25
Other Rights of Certificateholders 25
Sponsor Information 26
Trustee Information 28
Underwriting 29
Legal and Auditing Matters 30
Description of Bond Ratings 30
Tax-Exempt/Taxable Estimated Current Return Equivalents 33
Report of Allen, Gibbs & Houlik Independent Auditors 35
Statements of Net Assets 35
Trust Portfolios 36
Notes to Trust Portfolios 38
Estimated Cash Flows to Certificateholders 40
</TABLE>
41
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
3.1 Opinion and consent of Chapman and Cutler, special counsel to the
Depositor, as to legality of securities being registered.
3.2 Opinion of Chapman and Cutler, special counsel to the Depositor, as to
Federal and Nebraska tax status of securities being registered.
4.1 Consent of Stern Brothers & Co.
4.2 Consent of Allen, Gibbs & Houlik, L.C.
EX-27 Financial Data Schedules.
S-1
SIGNATURES
The Registrant, The Ranson Municipal Trust Multi-State Series 5 hereby
identifies The Ranson Municipal Trust Multi-State Series 1 for purposes of the
representations required by Rule 487 and represents the following: (1) that
the portfolio securities deposited in the series as to the securities of which
this Registration Statement is being filed do not differ materially in type or
quality from those deposited in such previous series; (2) that, except to the
extent necessary to identify the specific portfolio securities deposited in,
and to provide essential financial information for, the series with respect to
the securities of which this Registration Statement is being filed, this
Registration Statement does not contain disclosures that differ in any
material respect from those contained in the registration statements for such
previous series as to which the effective date was determined by the
Commission or the staff; and (3) that it has complied with Rule 460 under
the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, The Ranson Municipal Trust Multi-State Series 5, has duly caused
this Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Wichita and State of
Kansas on the 10th day of April, 1995.
THE RANSON MUNICIPAL TRUST MULTI-STATE SERIES 5
(REGISTRANT)
BY RANSON CAPITAL CORPORATION, (DEPOSITOR)
(SEAL)
By Alex R. Meitzner
__________________________________________
Executive Vice President
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 April 10, 1995.
Signature Title
_________ _____
John A. Ranson President, Chief Executive )
__________________
John A. Ranson Officer and Director )
Alex R. Meitzner Executive Vice President )
__________________
Alex R. Meitzner and Director )
Robin K. Pinkerton Secretary, Treasurer and ) Alex R. Meitzner
___________________ ____________________
Robin K. Pinkerton and Director ) (Attorney-in-fact)
S-2
EXHIBIT 1.1
THE RANSON MUNICIPAL TRUST MULTI-STATE SERIES 5
TRUST AGREEMENT
Dated: April 11, 1995
This Trust Agreement between Ranson Capital Corporation, as Depositor,
and Investors Fiduciary Trust Company, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Standard Terms and Conditions of Trust For The Kansas Tax-
Exempt Trust, Series 44 and Subsequent Series, Effective August 15, 1991"
(herein called the "Standard Terms and Conditions of Trust"), and such
provisions as are set forth in full and such provisions as are incorporated by
reference constitute a single instrument. All references herein to Articles
and Sections are to Articles and Sections of the Standard Terms and Conditions
of Trust.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
PART I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the Provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein incorporated
by reference in their entirety and shall be deemed to be a part of this
instrument as fully and to the same extent as though said provisions had been
set forth in full in this instrument.
PART II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed to:
(a) The Bonds defined in Section 1.01(1) listed in Schedule A
hereto have been deposited in trust under this Trust Agreement.
(b) The fractional undivided interest in and ownership of the
Trust represented by each unit is the amount set forth under "Summary of
Essential Financial Information - Fractional Undivided Interest in the
Trust per Unit" in the Prospectus.
(c) The First General Record Date shall be the record date
for the Interest Account and the amount set forth under "Distributions"
on page 2 of the Prospectus.
(d) The First Settlement Date shall be the date set forth
under "Summary of Essential Financial Information - First Settlement
Date" in the Prospectus.
(e) The second sentence of Section 4.03 of the Standard Terms
and Conditions of Trust is hereby revised as follows:
"Such compensation initially shall be $0.25 per $1,000
principal amount of Bonds."
(f) The second sentence of Section 6.04 of the Standard Terms
and Conditions of Trust is hereby revised as follows:
"Such compensation initially shall be $1.22 per $1,000 principal
amount of Bonds and may be periodically adjusted in response to
fluctuations in short-term interest rates (reflecting the cost to the
Trustee of advancing funds to the Trusts to meet scheduled
distributions)."
- -2-
IN WITNESS WHEREOF, Ranson Capital Corporation has caused this Trust
Agreement to be executed by its Chairman or President or one of its Vice
Presidents and Investors Fiduciary Trust Company, has caused this Trust
Agreement to be executed by one of its Officers all as of the day, month and
year first above written.
Ranson Capital Corporation, Depositor
By JOHN A. RANSON
___________________________
President
Investors Fiduciary Trust Company, Trustee
By Ron Puett
___________________________
Operations Officer
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
THE RANSON MUNICIPAL TRUST MULTI-STATE SERIES 5
(Note: Incorporated herein and made a part hereof is each "Portfolio"
as set forth in the Prospectus.)
April 11, 1995
Ranson Capital Corporation
Suite 450
120 South Market Street
Wichita, Kansas 67202
Re: The Ranson Municipal Trust Multi-State Series 5
Ladies/Gentlemen:
We have served as special counsel for Ranson Capital Corporation, as
Sponsor and Depositor (the "Depositor") of The Ranson Municipal Trust Multi-
State Series 5 (the "Trust"), in connection with the preparation, execution and
delivery of a Trust Agreement dated April 11, 1995, between Ranson Capital
Corporation, as Depositor, and Investors Fiduciary Trust Company, as Trustee,
pursuant to which the Depositor has delivered to and deposited the bonds listed
in Schedule A to the Trust Agreement with the Trustee and pursuant to which the
Trustee has issued to or on the order of the Depositor a certificate or
certificates representing units of fractional undivided interest in and
ownership of the Trust created under said Trust Agreement.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and the
execution and issuance of certificates evidencing the units of the Trust
have been duly authorized; and
2. The certificates evidencing the units of the Trust when
duly executed and delivered by the Depositor and the Trustee in
accordance with the aforementioned Trust Agreement, will constitute
valid and binding obligations of the Trust and the Depositor in
accordance with the terms thereof.
- -2-
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-58425) relating to the units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
April 11, 1995
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
Ranson Capital Corporation
Suite 450
120 South Market Street
Wichita, Kansas 67202
Re: The Ranson Municipal Trust Multi-State Series 5
Ladies/Gentlemen:
We have acted as special counsel for Ranson Capital Corporation,
Depositor of The Ranson Municipal Trust Multi-State Series 5 (the "Fund"), in
connection with the issuance of units of fractional undivided interest in each
Trust, under a Trust Agreement dated April 11, 1995 (the "Indenture") between
Ranson Capital Corporation, as Depositor, and Investors Fiduciary Trust
Company, as Trustee.
In this connection, we have examined the Registration Statement, the
form of Prospectus proposed to be filed with the Securities and Exchange
Commission, the Indenture and such other instruments and documents as we have
deemed pertinent.
Based upon the foregoing and upon an investigation of such matters of
law as we consider to be applicable, we are of the opinion that, under existing
Federal income tax law:
(i) Each Trust is not an association taxable as a corporation
but will be governed by the provisions of subchapter J (relating to
trusts) of chapter 1, Internal Revenue Code of 1986 (the "Code").
(ii) Each Certificateholder will be considered as owning a pro
rata share of each asset of a Trust in the proportion that the number of
units held by him bears to the total number of units outstanding. Under
subpart E, subchapter J of chapter 1 of the Code, income of a Trust will
be treated as income of each Certificateholder in the proportion
described, and an item of Trust income will have the same character in
the hands of a Certificateholder as it would have in the hands of the
Trustee. Accordingly, to the extent that the income of a Trust consists
of interest excludable from gross income under Section 103 of the Code,
such income will be excludable from Federal gross income of the
Certificateholders, except in the case of a
- -2-
Certificateholder who is a substantial user (or a person related to such
user) of a facility financed through issuance of any industrial development
bond or certain private activity bond held by a Trust. In the case of such
Certificateholder (and no other) interest received with respect to his
units attributable to such industrial development bonds or such private
activity bonds is includible in his gross income. However, the interest
on certain Bonds held by a Trust ("specified private activity bonds,"
within the meaning of Section 57(a)(5) of the Code) shall constitute a
specific item of tax preference for purposes of the alternative minimum
tax applicable to all Certificateholders, including individuals. As a
result, such interest income may be subject to the alternative minimum
tax. Moreover, in the case of certain corporations, interest on all of
the Bonds other than any "specified private activity bonds" (which is
included in computing the alternative minimum tax as described above)
held by a Trust is included in computing the alternative minimum tax
pursuant to Section 56(c) of the Code, and the environmental tax (the
"Superfund Tax") imposed by Section 59A of the Code. Interest on all of
the Bonds is included in the computation of the branch profits tax
imposed by Section 884 of the Code with respect to U.S. branches of
foreign corporations.
(iii) Gain or loss will be recognized to a Certificateholder
upon redemption or sale of his units. Such gain or loss is measured by
comparing the proceeds of such redemption or sale with the adjusted
basis of the units represented by his Certificate. Before adjustment,
such basis would normally be cost if the Certificateholder had acquired
his units by purchase, plus his aliquot share of advances by the Trustee
to a Trust to pay interest on bonds delivered after the
Certificateholder's settlement date to the extent that such interest
accrued on the bonds during the period from the Certificateholder's
settlement date to the date such bonds are delivered to the respective
Trust, but only to the extent that such advances are to be repaid to the
Trustee out of interest received by such Trust with respect to such
bonds. In addition, such basis will be increased by the
Certificateholder's aliquot share of the accrued original issue discount
with respect to each bond held by a Trust with respect to which there
was an original issue discount at the time the bond was issued and
reduced by the annual amortization of bond premium, if any, on bonds
held by such Trust.
(iv) If the Trustee disposes of a Trust asset (whether by
sale, payment on maturity, redemption or otherwise) gain or loss is
recognized to the Certificateholder and the amount thereof is measured
by comparing the Certificateholder's aliquot share of the total proceeds
from the transaction with his basis for his fractional interest in the
asset disposed of. Such basis is ascertained by apportioning the tax
basis for his units among each of the Trust assets (as of the date on
which his units were acquired) ratably according to their values as of
the valuation date nearest the date on which he purchased such units. A
Certificateholder's basis in his units and of his fractional interest in
each Trust asset must be reduced by the amount of his aliquot share of
interest received by the Trust, if any, on bonds delivered after the
Certificateholder's settlement date to the extent that such interest
accrued on the bonds during the period from the Certificateholder's
- -3-
settlement date to the date such bonds are delivered to the Trust, must
be reduced by the annual amortization of bond premium, if any, on bonds
held by such Trust and will be increased by the Certificateholder's
share of the accrued original issue discount with respect to each bond
which, at the time the bond was issued, had original issue discount.
(v) In the case of any Bond held by a Trust where the "stated
redemption price at maturity" exceeds the "issue price", such excess
shall be original issue discount. With respect to each Unitholder, upon
the purchase of his Units subsequent to the original issuance of Bonds
held by a Trust, Section 1272(a)(7) of the Code provides for a reduction
in the accrued "daily portion" of such original issue discount upon the
purchase of a Bond subsequent to the Bond's original issue, under
certain circumstances. In the case of any Bond held by a Trust the
interest on which is excludable from gross income under Section 103 of
the Code, any original issue discount which accrues with respect to the
bonds will be treated as interest which is excludable from gross income
under Section 103 of the Code.
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 would have 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.
Because the Trusts includes some "specified private activity bonds"
within the meaning of Section 57(a)(5) of the Code issued on or after August 8,
1986, that portion of a Trust Fund's interest income attributable to such Bonds
shall be treated as a specific item of tax preference when computing the
alternative minimum tax for all taxpayers, including individuals. 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 ("AMTI"), which is the corporation's taxable
income with certain adjustments.
Pursuant to Section 56(c) of the Code, one of the adjustment items used
in computing AMTI and the Superfund Tax of a corporation (other than an S
Corporation, Regulated Investment Company, Real Estate Investment Trust or
REMIC) for taxable years beginning after 1989, is an amount equal to 75% of the
excess of such corporation's "adjusted current earnings" over an amount equal
to its AMTI (before such adjustment item and the alternative tax net operating
loss deduction). "Adjusted current earnings" includes all tax-exempt interest,
including interest on all Bonds in a Trust, and tax-exempt original issue
discount.
- -4-
Effective for tax returns filed after December 31, 1987, all taxpayers
are required to disclose to the Internal Revenue Service the amount of tax-
exempt interest earned during the year.
Section 265 of the Code provides for a reduction in each taxable year of
100 percent of the otherwise deductible interest on indebtedness incurred or
continued by financial institutions, to which either Section 585 or Section 593
of the Code applies, to purchase or carry obligations acquired after August 7,
1986, the interest on which is exempt from Federal income taxes for such
taxable year. Under rules prescribed by Section 265, the amount of interest
otherwise deductible by such financial institutions in any taxable year which
is deemed to be attributable to tax-exempt obligations acquired after August 7,
1986, will be the amount that bears the same ratio to the interest deduction
otherwise allowable (determined without regard to Section 265) to the taxpayer
for the taxable year as the taxpayer's average adjusted basis (within the
meaning of Section 1016) of tax-exempt obligations acquired after August 7,
1986, bears to such average adjusted basis for all assets of the taxpayer,
unless such financial institution can otherwise establish, under regulations to
be prescribed by the Secretary of the Treasury, the amount of interest on
indebtedness incurred or continued to purchase or carry such obligations.
We also call attention to the fact that, under Section 265 of the Code,
interest on indebtedness incurred or continued to purchase or carry Units by
taxpayers other than certain financial institutions, as referred to above, is
not 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.
"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 deminimus
rule. Market discount can arise based on the price a Trust pays for Bonds or
the price a Certificateholder pays for his or her units. Under the Tax Act,
accretion of market discount is taxable as ordinary income; under prior law,
the accretion had been treated as capital gain. Market discount that accretes
while a Trust holds a Bond would be recognized as ordinary income by the
Certificateholders when principal payments are received on the Bond, upon sale
or at redemption (including early redemption), or upon the sale or redemption
of his or her units, unless a Certificateholder elects to include market
discount in taxable income as it accrues.
- -5-
We have also examined the income tax laws of the State of Kansas, and we
have made the following assumptions. The assets of the Kansas Tax-Exempt Trust
(the "Kansas Trust") will consist of interest-bearing obligations issued by or
on behalf of the State of Kansas (the "State"), its political subdivisions and
authorities, and, provided the interest thereon is exempt from State income
taxes, by or on behalf of territories or possessions of the United States of
America, or its political subdivisions, agencies or instrumentalities (the
"Bonds"). Distributions of interest on the Bonds received by the Kansas Trust
will be made monthly unless a Certificateholder elects to receive them semi-
annually.
Although we express no opinion with respect thereto, in rendering the
opinion expressed herein, we have assumed that the Bonds were validly issued by
the State of Kansas, or its instrumentalities or municipalities and by or on
behalf of territories or possessions of the United States of America, or its
instrumentalities or municipalities, as the case may be.
Based on the foregoing, and review and consideration of existing State
laws, and assuming interest on the Bonds is excludable from gross income under
Section 103 of the Internal Revenue Code of 1986, it is our opinion, and we
herewith advise you, as follows:
Under the laws of the State of Kansas, as presently enacted and
construed:
(i) The Kansas Trust is not an association taxable as a
corporation for Kansas income tax purposes;
(ii) Each Certificateholder of the Kansas Trust will be
treated as the owner of a pro rata portion of the Kansas Trust, and the
income and deductions of the Kansas Trust will therefore be treated as
income of the Certificateholder under Kansas law;
(iii) Interest on the 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;
(iv) Interest on the 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;
(v) Interest on Bonds issued by the State of Kansas or any of
its political subdivisions will be subject to the tax imposed on
- -6-
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;
(vi) Interest on the Bonds which is exempt from Kansas income
taxation when received by the Kansas Trust will continue to be exempt
when distributed to a Certificateholder (other than a bank, trust
company or savings and loan association);
(vii) Each Certificateholder of the Kansas Trust will recognize
gain or loss for Kansas income tax purposes if the Trustee disposes of a
Bond (whether by sale, exchange, payment on maturity, retirement or
otherwise) or if the Certificateholder redeems or sells Units of the
Kansas Trust to the extent that such transaction results in a recognized
gain or loss for federal income tax purposes;
(viii) Interest received by the Kansas Trust on the Bonds is
exempt from intangibles taxation imposed by any counties, cities and
townships pursuant to present Kansas law; and
(ix) No opinion is expressed regarding whether the gross
earnings derived from the Units is subject to intangibles taxation
imposed by any counties, cities and townships pursuant to present Kansas
law.
We have not examined any of the Bonds to be deposited and held in the
Kansas Trust or the proceedings for the issuance thereof or the opinions of
bond counsel with respect thereto, and therefore express no opinion as to the
exemption from State income taxes of interest on the Bonds if received directly
by a Certificateholder.
The assets of the Nebraska Tax-Exempt Trust (the "Nebraska Trust") will
consist of interest-bearing obligations issued by or on behalf of the State of
Nebraska (the "State") or counties, municipalities, authorities or political
subdivisions thereof (the "Nebraska Bonds") or by the Commonwealth of Puerto
Rico, Guam and the United States Virgin Islands (the "Possession Bonds")
(collectively, the "Bonds"). With respect to certain Nebraska Bonds which may
be held by the Nebraska Trust, the opinions of bond counsel to the issuing
authorities for such bonds have indicated that the interest on such bonds is
included in computing the Nebraska alternative minimum tax imposed by Section
77-2715(2) of the Revised Nebraska Statutes (the "Nebraska Minimum Tax") (the
"Nebraska AMT Bonds").
Although we express no opinion with respect to the issuance of the
Bonds, in rendering our opinion expressed herein, we have assumed that: (i)
the Bonds were validly issued, (ii) the interest thereon is excludable from
gross income for federal income tax purposes, (iii) none of the Bonds (other
than the Nebraska AMT Bonds, if any) are "specified private activity bonds" the
interest on which is included as an item of tax preference in the computation
of the alternative minimum tax for federal income tax purposes, (iv) interest
on the Nebraska Bonds (other than the Nebraska AMT Bonds, if any), if received
- -7-
directly by a Certificateholder, would be exempt from both the Nebraska income
tax, imposed by Section 77-2714 et. seq. of the Revised Nebraska Statutes
(other than the Nebraska Minimum Tax) (the "Nebraska State Income Tax") and the
Nebraska Minimum Tax, if any, and (v) interest on the Nebraska AMT Bonds, if
received directly by a Certificateholder, would be exempt from the Nebraska
State Income Tax. This opinion does not address the taxation of persons
other than full time residents of Nebraska.
Based on the foregoing, and based on review and consideration of
existing laws of the State as of this date, it is our opinion, and we herewith
advise you, as follows:
(1) the Nebraska Trust is not an association taxable as a
corporation, each Certificateholder of the Nebraska Trust will be
treated as the owner of a pro rata portion of the Trust, and the income
of such portion of the Nebraska Trust will therefore be treated as the
income of the Certificateholder for both Nebraska State Income Tax and
Nebraska Minimum Tax purposes;
(2) interest on the Bonds which is exempt from both the
Nebraska State Income Tax and the Nebraska Minimum Tax when received by
the Nebraska Trust, and which would be exempt from both the Nebraska
State Income Tax and the Nebraska Minimum Tax if received directly by a
Certificateholder, will retain its status as exempt from such taxes when
received by the Nebraska Trust and distributed to a Certificateholder;
(3) interest on the Nebraska AMT Bonds, if any, which is exempt from
the Nebraska State Income Tax but is included in the computation of the
Nebraska Minimum Tax when received by the Nebraska Trust, and which
would be exempt from the Nebraska State Income Tax but would be included
in the computation of the Nebraska Minimum Tax if received directly by a
Certificateholder, will retain its status as exempt from the Nebraska
State Income Tax but included in the computation of the Nebraska Minimum
Tax when received by the Nebraska Trust and distributed to a
Certificateholder;
(4) to the extent that interest derived from the Nebraska
Trust by a Certificateholder with respect to any Possession Bonds is
excludable from gross income for Federal income tax purposes pursuant to
48 U.S.C. Section 745, 48 U.S.C. Section 1423 and 48 U.S.C. Section 1403,
such interest will not be subject to either the Nebraska State Income Tax
or the Nebraska Minimum Tax;
(5) each Certificateholder of the Nebraska Trust will
recognize gain or loss for both Nebraska State Income Tax and Nebraska
Minimum Tax purposes if the Trustee disposes of a bond (whether by
redemption, sale or otherwise) or if the Certificateholder redeems or
sells Units of the Nebraska Trust to the extent that such a transaction
results in a recognized gain or loss to such Certificateholder for
Federal income tax purposes;
- -8-
(6) the Nebraska State Income Tax does not permit a deduction
for interest paid or incurred on indebtedness incurred or continued to
purchase or carry Units in the Nebraska Trust, the interest on which is
exempt from such Tax; and
(7) in the case of a Certificateholder subject to the State
financial institutions franchise tax, the income derived by such
Certificateholder from his pro rata portion of the Bonds held by the
Nebraska Trust may affect the determination of such Certificateholder's
maximum franchise tax.
We have not examined any of the Bonds to be deposited and held in the
Nebraska Trust or the proceedings for the issuance thereof or the opinions of
bond counsel with respect thereto, and therefore express no opinion as to the
exemption from either the Nebraska State Income Tax or the Nebraska Minimum Tax
of interest on the Nebraska Bonds if received directly by a Certificateholder.
We have also examined the laws of the State of Missouri to determine
their applicability to the Trusts. It is our opinion that under Missouri law,
as presently enacted and construed:
(i) The Trusts are not associations taxable as corporations
for Missouri income tax purposes.
(ii) The Certificateholders of each Trust will be treated as
the owners of a pro rata portion of such Trust and the income of the
Trust will therefore be treated as income of the Certificateholders
under Missouri law.
(iii) The Trusts will not be subject to the Kansas City,
Missouri Earnings and Profits Tax and each Certificateholder's share of
income 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).
Very truly yours,
CHAPMAN AND CUTLER
EFF/maz
EXHIBIT 4.1
April 11, 1995
Mr. Eric Fees
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
Re: The Ranson Municipal Trust Multi-State Series 5
Kansas Tax-Exempt Trust, Series 74
CUSIP #485532832
The Nebraska Tax-Exempt Trust, Series 5
CUSIP #639701143
(File No. 33-58425)
Dear Eric:
It is our understanding that a Registration Statement has been filed with the
Securities and Exchange Commission relating to units of the subject fund.
Attached you will find our initial evaluation. Pursuant to said
evaluation, the total bid side value of the Bonds in The Kansas Tax-Exempt
Trust, Series 74 is $2,972,854 the ask side value is $3,007,097; the
total bid side value of the Bonds in The Nebraska Tax-Exempt Trust, Series 5
is $2,446,330, the ask side value is $2,471,832.
This letter will evidence our consent to the use of our name on the subject
registration statement as the initial evaluator of the securities in the
portfolio of the subject trust.
Sincerely,
STERN BROTHERS & CO.
James Howk
Managing Director
JH:sg
EXHIBIT 4.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm as experts under the caption
"Legal and Auditing Matters" and to the use of our report dated April 11, 1995
in Amendment No. 1 to the Registration Statement (Form S-6 File No. 33-58425)
and related Prospectus of The Ranson Municipal Trust Multi-State Series 5.
ALLEN, GIBBS & HOULIK
Wichita, Kansas
April 11, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
Amendment number 1 to form S-6 and is qualified in its entirety by
reference to such Amendment number 1 to form S-6.
</LEGEND>
<SERIES>
<NUMBER> 74
<NAME> KANSAS
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> APR-11-1995
<PERIOD-START> APR-11-1995
<PERIOD-END> APR-11-1995
<INVESTMENTS-AT-COST> 3,007,097
<INVESTMENTS-AT-VALUE> 3,007,097
<RECEIVABLES> 45,451
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,052,548
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from
Amendment number 1 to form S-6 and is qualified in its entirety by
reference to such Amendment number 1 to form S-6.
</LEGEND>
<SERIES>
<NUMBER> 5
<NAME> NEBRASKA
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> APR-11-1995
<PERIOD-START> APR-11-1995
<PERIOD-END> APR-11-1995
<INVESTMENTS-AT-COST> 2,471,832
<INVESTMENTS-AT-VALUE> 2,471,832
<RECEIVABLES> 31,471
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,503,303
<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 31,471
<TOTAL-LIABILITIES> 31,471
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,471,832
<SHARES-COMMON-STOCK> 2,600
<SHARES-COMMON-PRIOR> 2,600
<ACCUMULATED-NII-CURRENT> 0
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<OVERDISTRIBUTION-GAINS> 0
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<NET-CHANGE-FROM-OPS> 0
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<NUMBER-OF-SHARES-SOLD> 0
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
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