File No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact name of Trust: THE 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
Attention: John A. Ranson
120 South Market, Suite 450
Wichita, Kansas 67202
CHAPMAN AND CUTLER
Attention: Eric F. Fess
111 West Monroe Street
Chicago, Illinois 60603
E. Title and amount of securities being registered: 1,000* Units
F. Proposed maximum offering price to the public of the securities being
registered ($1,010 per Unit**): $1,010,000
G. Amount of filing fee, computed at one-twenty-ninth of 1 percent of the
proposed maximum aggregate offering price to the public: $348.28
H. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT
* 500 Units registered for primary distribution.
500 Units registered for resale by Depositor of Units previously sold in
primary distribution.
** ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION FEE
____________________________________________________________________________
* The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
THE RANSON MUNCIPAL 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 Accured 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 jof 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 or ) Trustee Information
elimination of underlying securities ) Description of Trust Portfolios-
) 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 ) Certain information regarding
57. ) periodic payment certificates
58. )
59. Financial statements (Instructions ) Report of Allen, Gibbs &
1(c) to Form S-6) ) Houlik, L.C. Independent
) Auditors
) Statement of Net Assets
Preliminary Prospectus Dated April 4, 1995
THE RANSON MUNICIPAL TRUST, MULTI-STATE
1,000 Units Series 5 (A Unit Investment Trust)
The attached final Prospectus for a prior Series of the Trust is hereby used
as a preliminary Prospectus for the above state Series. The narrative
information and structure of the attached final Prospectus will be
substantially the same as that of the final Prospectus for this Series.
Information with respect to pricing, the number of Units, dates and summary
information regarding the characteristics of securities to be deposited in
this Series is not now available and will be different since each Series has
a unique portfolio. Accordingly, the information contained herein with regard
to the previous Series should be considered as being included for
informational purposes only. Ratings of the securities in this Series are
expected to be comparable to those of the securities deposited in the
previous Series. However, the Estimated Current Return for this Series will
depend on the interest rates and offering prices for the securities in this
Series and may vary materially from that of the previous Series.
A registration statement relating to the units of this Series has been filed
with the Securities and Exchange Commission but has not yet become effective.
Information contained herein is subject to completion or amendment. Such
Units may not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This Prospectus shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be any
sale of the Units in any state in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such state.
PROSPECTUS
THE RANSON MUNICIPAL TRUST, MULTI-STATE SERIES 4
THE NEBRASKA TAX-EXEMPT TRUST, SERIES 4
THE TRUST. The Ranson Municipal Trust, Multi-State Series 4 consists of the
one underlying unit investment trust set forth above. The Nebraska Tax-Exempt
Trust is referred to herein as the "Trust". The Trust initially consists of
bonds and delivery statements relating to contracts to purchase bonds and,
thereafter, will consist of a $2,410,000 aggregate principal amount portfolio
comprised of interest bearing obligations issued by or on behalf of
municipalities or other governmental authorities in the State of Nebraska (the
"Bonds" or "Securities"). In the opinion of counsel, interest income to the
Trust and to Certificateholders thereof, with certain exceptions, is exempt
under existing law from Federal and Nebraska state income taxes, but may be
subject to the Federal alternative minimum tax and other state and local
taxes. Capital gains, if any, are subject to tax. The Trust will hold no more
than 20% of its net assets in Securities which are subject to the Federal
alternative minimum tax. As of the Date of Deposit, approximately 17% of the
principal amount of the Bonds in the Trust, was subject to the Federal
alternative minimum tax. The objectives of the Trust include 1) interest
income which is exempt from Federal income taxes and Nebraska state income
taxes, 2) conservation of capital, and 3) liquidity of investment (see
"Objectives of the Trust"). The payment of interest and the preservation of
capital are dependent upon the continuing ability of the issuers and/or
obligors of the Bonds to meet their respective obligations. Certain of the
Bonds may be 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 would reduce the aggregate
principal amount of the Trust and could 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 portfolio in the event of a failed contract. There
is no assurance that the Trust's objectives will be met. The Sponsor of the
Trust is Ranson Capital Corporation, Suite 450, 120 South Market Street,
Wichita, Kansas 67202.
PUBLIC OFFERING PRICE. The Public Offering Price of the Units during the
initial offering period is equal to the aggregate offering price of the Bonds
in the portfolio divided by the number of Units outstanding, plus a sales
charge equal to 4.90% of the Public Offering Price (5.152% of the net amount
invested). After the initial public offering period, the secondary market
public offering price will be equal to the aggregate bid price of the Bonds in
the portfolio of the Trust divided by the number of Units outstanding, plus a
sales charge of 5.50% of the Public Offering Price (5.820% of the net amount
invested). If the Bonds in the Trust 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, accrued
interest will be added from date of purchase to the date of settlement (five
business days after order). 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 $998.11. During the initial offering period, the sales charge
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 January 19, 1995.
RANSON CAPITAL CORPORATION
SPONSOR
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 Financial Information." Initially, Units will be
offered for sale in the minimum amount of five Units.
DISTRIBUTIONS. Distributions of interest received by the Trust will be made
on a monthly basis (pro-rated on an annual basis). The first distribution to
Certificateholders will be made on March 1, 1995 to holders of record on
February 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 addition, although not obligated to
do so, the Sponsor intends to maintain a secondary market for the Units at
prices based upon the aggregate bid price of the Bonds in the portfolio of the
Trust (see "Redemption and Repurchase of Units").
2
<TABLE>
<CAPTION>
THE RANSON MUNICIPAL TRUST, MULTI-STATE SERIES 4
THE NEBRASKA TAX-EXEMPT TRUST, SERIES 4
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
As of February 18, 1995, the business day prior to the Date of Deposit
SPONSOR AND EVALUATOR: RANSON CAPITAL CORPORATION
TRUSTEE: INVESTORS FIDUCIARY TRUST COMPANY
<S> <C>
Principal Amount of Bonds in Trust $ 2,410,000
Number of Units 2,510
Fractional Undivided Interest in Trust per Unit 1/2,510
Principal Amount (Par Value) of Bonds per Unit(1) $ 960.16
Aggregate Offering Price of Bonds in the Trust $ 2,382,505
Aggregate Offering Price of Bonds per Unit $ 949.21
Plus Sales Charge 4.90% (5.152% of the Aggregate
Offering Price of the Bonds) $ 48.90
Public Offering Price per Unit(2) $ 998.11
Redemption Price per Unit(3) $ 937.14
Sponsor's Initial Repurchase Price per Unit(3)(4) $ 949.21
Excess of Public Offering Price per Unit Over
Redemption Price per Unit $ 60.97
Excess of Public Offering Price per Unit Over
Sponsor's Initial Repurchase Price per Unit $ 48.90
Estimated Annual Interest Income per Unit $ 62.75
Less: Estimated Annual Expense per Unit $ 2.69
Estimated Annual Net Interest Income per Unit $ 60.06
Estimated Daily Rate of Net Interest Income Accrual per Unit $ .1668
Estimated Current Return(5)(6)(7) 6.02%
Estimated Long-Term Return(5)(6)(7) 5.87%
Initial Distribution(March 1, 1995) $3.17 per Unit
First Settlement Date January 26, 1995
Minimum Principal Distribution $1.00 per Unit
Mandatory Termination Date December 31, 2044
Minimum Principal Amount of Bonds of Trust Under Which
Indenture May Be Terminated $482,000
Distribution Dates First day of every month commencing March 1, 1995
Trustee's Annual Fee $1.22 per $1,000 principal amount of Bonds,
exclusive of expenses of the Trust.
Evaluator's Annual Fee $.25 per $1,000 principal amount of Bonds
Annual Audit Fee $.40 per Unit
</TABLE>
[FN]
Evaluations for purpose of sale, purchase or redemption of Units are made as
of 3:00 P.M. Central time on days of trading on the New York Stock Exchange
next following receipt of an order for a sale or purchase of Units or receipt
by the Trustee of Units tendered for redemption.
(1) Many unit investment trusts comprised of municipal securities issue a
number of units such that each unit represents approximately $1,000
principal amount of underlying securities. The Sponsor on the other hand
in determining the number of Trust Units has elected not to follow this
format but rather to provide for that number of Units which will establish
as of the Date of Deposit a Public Offering Price per Unit of
approximately $1,000.
3
(2) No accrued interest will be added for any person contracting to
purchase Units on the Date of Deposit. Anyone ordering Units after such
date will pay accrued interest from the First Settlement Date to the date
of settlement (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 Trust; however,
during the initial offering period such prices will be based on the
aggregate offering price of the Bonds.
(5) The Estimated Current Return and Estimated Long-Term Return are
increased for transactions entitled to a reduced sales charge (see "Public
Offering Information").
(6) The Estimated Current Return is calculated by dividing the estimated
net annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities while the
Public Offering Price will vary with changes in the offering price of the
underlying Securities; therefore, there is no assurance that the present
Estimated Current Return indicated above will be realized in the future.
The Estimated Long-Term Return is calculated using a formula which (1)
takes into consideration, and determines and factors in the relative
weightings of, the market values, yields (which takes into account the
amortization of premiums and the accretion of discounts) and estimated
retirements of all of the Bonds in the Trust and (2) takes into account
the expenses and sales charge associated with each Trust Unit. Since the
market values and estimated retirements of the Bonds and the expenses of
the Trust will change, there is no assurance that the present Estimated
Long-Term Return as indicated above will be realized in the future. The
Estimated Current Return and Estimated Long-Term Return are expected to
differ because the calculation of the Estimated Long-Term Return reflects
the estimated date and amount of principal returned while the Estimated
Current Return calculation includes only net annual interest income and
Public Offering Price. Neither rate reflects the true return to
Certificateholders which is lower because neither includes the effect of
the delay in the first payment to Certificateholders.
(7) These figures are based on estimated per Unit cash flows. Estimated
cash flows will vary with changes in fees and expenses, with changes in
current interest rates and with the principal prepayment, redemption,
maturity, call, exchange or sale of the underlying Securities. The
estimated cash flows for this Trust are set forth under the section titled
"Estimated Cash Flows to Certificateholders."
4
SUMMARY OF THE TRUST
The Ranson Municipal Trust, Multi-State Series 4, which is comprised of
one unit investment trust, The Nebraska Tax-Exempt Trust, Series 4, 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.
The Trust consists of a portfolio of interest bearing obligations (or
delivery statements relating to contracts to purchase obligations) issued by
or on behalf of the State of Nebraska 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 is exempt from Nebraska state income tax. However, in the case of
corporations, interest on all obligations held by the Trust may be subject to
the alternative minimum tax for Federal income tax purposes. Accordingly, the
Trust may be appropriate only for investors who are not subject to the
alternative minimum tax. See "Tax Status (Federal, State, Capital Gains)." An
investment in the Trust should be made with an understanding of the risks
associated with an investment in such obligations. Fluctuations in interest
rates may cause corresponding fluctuations in the value of the Bonds. 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 $2,410,000 principal amount of interest-bearing obligations,
including delivery statements relating to contracts for the purchase of
certain such obligations. Upon deposit of such Bonds the Trustee delivered to
the Sponsor a certificate evidencing the ownership of 2,510 Units for the
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 the Trust represented by
each unredeemed Unit will increase, although the actual interest in the Trust
represented by such fraction will remain unchanged. Units in the Trust will
remain outstanding until redeemed upon tender to the Trustee by
Certificateholders, which may include the Sponsor, or until the termination of
the Indenture.
The Indenture may be amended at any time by consent of Certificateholders
representing at least 51% of the Units of the Trust then outstanding. The
Indenture may also be amended by the Trustee and the Sponsor without the
consent of any of the Certificateholders 1) to cure any ambiguity or to
correct or supplement any provision thereof which may be defective or
inconsistent, or 2) to make such other provisions as shall not adversely
affect the interest of the Certificateholders, provided, however, that the
Indenture may not be amended to increase the number of Units issuable
thereunder or to permit the deposit or acquisition of bonds either in addition
to, or in substitution for any of the Bonds initially deposited in the Trust
except in connection with the limited right of substitution of Replacement
Bonds for failed Bonds (see "Description of Trust Portfolio") and for the
substitution of refunding bonds under certain circumstances. The Trustee shall
advise the Certificateholders of any amendment promptly after the execution
thereof.
The Trust may be terminated at any time by consent of Certificateholders
representing at least 51% of the Units of the Trust then outstanding or by the
Trustee when the value of the Trust, as shown by any semi-annual evaluation,
is less than 20% of the original principal amount of the Trust and will be
liquidated by the Trustee in the event that a sufficient number of Units not
yet sold are tendered for redemption by the Sponsor and the Underwriters
thereby reducing the net worth of the Trust to less than 40% of the principal
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
5
in the Trust, but in no event shall it continue beyond the end of the calendar
year preceding the fiftieth anniversary of its execution.
Written notice of any termination specifying the time or times at which
Certificateholders may surrender their certificates for cancellation shall be
given by the Trustee to each Certificateholder at the address appearing on the
registration books of the Trust maintained by the Trustee. The Trustee will
begin to liquidate any Bonds held in the Trust within a reasonable period of
time from said notification and shall deduct from the proceeds any accrued
costs, expenses or indemnities provided by the Indenture, including any
compensation due the Trustee, any costs of liquidation and any amounts
required for payment of any applicable taxes, governmental charges or final
operating costs of the Trust.
The Trustee shall then distribute to Certificateholders their pro rata
shares of the remaining balances in the Principal and Interest Accounts of the
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 Trust
which the Trustee may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction.
None of the aggregate principal amount of the Bonds in the Trust are "zero
coupon" bonds. Zero coupon bonds are purchased at a deep discount because the
buyer receives only the right to receive a final payment at the maturity of
the bond and does not receive any periodic interest payments. The effect of
owning deep discount bonds which do not make current interest payments (such
as the zero coupon bonds) is that a fixed yield is earned not only on the
original investment but also, in effect, on all discount earned during the
life of such obligation. This implicit reinvestment of earnings at the same
rate eliminates the risk of being unable to reinvest the income on such
obligation at a rate as high as the implicit yield on the discount obligation,
but at the same time eliminates the holder's ability to reinvest at higher
rates in the future. For this reason, zero coupon bonds are subject to
substantially greater price fluctuations during periods of changing market
interest rates than are securities of comparable quality which pay interest
currently. See also note (6) to "Notes to Trust Portfolio."
6
DESCRIPTION OF TRUST PORTFOLIO
PORTFOLIO. The Trust consists of 6 obligations of issuers located in the
State of Nebraska. None of the issues in the 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
(45.6%); Health Care, 1 (21.2%); Education, 1 (16.6%) and Transportation, 1
(16.6%). The dollar weighted average maturity of the Bonds in the Trust is
21.6 years. Approximately 17% of the aggregate principal amount of the issues
in the 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.
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.
7
The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of Bonds and does not
purport to be a complete or exhaustive description of all adverse conditions
to which the issuers in the Trust are subject. Additionally, many factors
including national economic, social and environmental policies and conditions,
which are not within the control of the issuers of Bonds, could affect or
could have an adverse impact on the financial condition of Nebraska and
various agencies and political subdivisions located in Nebraska. The Sponsor
is unable to predict whether or to what extent such factors or other factors
may affect the issuers of Bonds, the market value or marketability of the
Bonds or the ability of the respective issuers of the Bonds acquired by the
Trust to pay interest on or principal of the Bonds.
Approximately 46% of the aggregate principal amount of the Bonds in the
Trust consists of obligations whose revenues are primarily derived from the
sale of electric energy. Utilities are generally subject to extensive
regulation by state utility commissions which, among other things, establish
the rates which may be charged and the appropriate rate of return on an
approved asset base. The problems faced by such issuers include the difficulty
in obtaining approval for timely and adequate rate increases from the
governing public utility commission, the difficulty in financing large
construction programs, the limitations on operations and increased costs and
delays attributable to environmental considerations, increased competition,
recent reductions in estimates of future demand for electricity in certain
areas of the country, the difficulty of the capital market in absorbing
utility debt, the difficulty in obtaining fuel at reasonable prices and the
effect of energy conservation. All of such issuers have been experiencing
certain of these problems in varying degrees. In addition, Federal, state and
municipal governmental authorities may from time to time review existing and
impose additional regulations governing the licensing, construction and
operation of nuclear power plants, which may adversely affect the ability of
the issuers of such Bonds to make payments of principal and/or interest on
such Bonds.
Approximately 21% of the aggregate principal amount of the Bonds in the
Trust are hospital revenue bonds. In view of this, an investment in the Trust
should be made with an understanding of the characteristics of such issuers
and the risks which such an investment may entail. Ratings of bonds issued for
health care facilities are often based on feasibility studies that contain
projections of occupancy levels, revenues and expenses. A facility's gross
receipt and net income available for debt service will be affected by future
events and conditions including, among other things, demand for services and
the ability of the facility to provide the services required, physicians'
confidence in the facility, management capabilities, economic developments in
the service area, competition, efforts by insurers and governmental agencies
to limit rates, legislation establishing state rate-setting agencies,
expenses, the cost and possible unavailability of malpractice insurance, the
funding of Medicare, Medicaid and other similar third party payor programs,
and government regulation. Federal legislation requires a system of
prospective Medicare reimbursement which may restrict the flow of revenues to
hospitals and other facilities which are reimbursed for services provided
under the Medicare program. Future legislation or changes in the areas noted
above, among other things, would affect all hospitals to varying degrees and,
accordingly, any adverse changes in these areas may adversely affect the
ability of such issuers to make payment of principal and interest on Bonds
held in the portfolio of the Trust. Such adverse changes also may adversely
affect the ratings of the Bonds held in the portfolio of the Trust.
Approximately 17% of the aggregate principal amount of the Bonds in the
Trust consists of obligations of issuers which are, or which govern the
operation of colleges and universities and whose revenues are derived mainly
from tuition, dormitory revenues, grants and endowments. General problems
relating to college and university obligations would include the prospect of a
declining percentage of the population consisting of "college" age
8
individuals, possible inability to raise tuitions and fees sufficiently to
cover increased operating costs, the uncertainty of continued receipt of
Federal grants and state funding and new government legislation or regulations
which may adversely affect the revenues or costs of such issuers. All of such
issuers have been experiencing certain of these problems in varying degrees.
Approximately 17% of the aggregate principal amount of Bonds in the 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.
REPLACEMENT BONDS. Because certain of the Bonds in the Trust may from time to
time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Certificateholders and will not be reinvested, no assurance can
be given that the Trust will retain for any length of time its present size
and composition. Neither the Sponsor nor the Trustee shall be liable in any
way for any default, failure or defect in any Bond. In the event of a failure
to deliver any Bond that has been purchased for the Trust under a contract,
including any Bonds purchased on a "delayed delivery" basis ("Failed Bonds"),
the Sponsor is authorized under the Indenture to direct the Trustee to acquire
other bonds ("Replacement Bonds") to make up the original corpus of the Trust.
The Replacement Bonds must be purchased within 20 days after delivery of
the notice of the failed contract and the purchase price (exclusive of accrued
interest) may not exceed the amount of funds reserved for the purchase of the
Failed Bonds. The Replacement Bonds (i) must be tax-exempt bonds issued by the
State of Nebraska 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.
("Moody's"). Whenever a Replacement Bond has been acquired for the Trust, the
Trustee shall, within five days thereafter, notify all Certificateholders of
the Trust of the acquisition of the Replacement Bonds and shall, on the next
monthly distribution date which is more than 30 days thereafter, make a pro
rata distribution of the amount, if any, by which the cost to the Trust of the
Failed Bond exceeded the cost of the Replacement Bond plus accrued interest.
Once the original corpus of the Trust is acquired, the Trustee will have no
power to vary the investment of the Trust, i.e., the Trust will have no
managerial power to take advantage of market variations to improve a
Certificateholder's investment.
If the right to limited substitution described in the preceding paragraph
shall not be utilized to acquire Replacement Bonds in the event of a failed
contract, the Sponsor will refund the sales charge attributable to such Failed
Bonds to all Certificateholders of the Trust and distribute the principal and
accrued interest (at the coupon rate of such Failed Bonds to the date the
Failed Bonds are removed from the Trust) attributable to such Failed Bonds not
more than 30 days after such removal or such earlier time as the Trustee in
its sole discretion deems to be in the interest of the Certificateholders. In
the event a Replacement Bond should not be acquired by the Trust, the
estimated net annual interest income per Unit for the Trust would be reduced
and the Estimated Current Return and Estimated Long-Term Return thereon might
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
9
other securities at a yield equal to or in excess of the yield which such
proceeds were earning to Certificateholders in the Trust.
GENERAL. Certain of the Bonds in the Trust are subject to redemption prior
to their stated maturity date pursuant to sinking fund provisions, call
provisions or extraordinary optional or mandatory redemption provisions. A
sinking fund is a reserve fund accumulated over a period of time for
retirement of debt. A callable debt obligation is one which is subject to
redemption or refunding prior to maturity at the option of the issuer. A
refunding is a method by which a debt obligation is redeemed, at or before
maturity, by the proceeds of a new debt obligation. In general, call
provisions are more likely to be exercised when the offering side valuation is
at a premium over par than when it is at a discount from par. The portfolio
contains a listing of the sinking fund and call provisions, if any, with
respect to each of the debt obligations. Extraordinary optional redemptions
and mandatory redemptions result from the happening of certain events.
Generally, events that may permit the extraordinary optional redemption of
Bonds or may require the mandatory redemption of Bonds include, among others:
a final determination that the interest on the Bonds is taxable; the
substantial damage or destruction by fire or other casualty of the project for
which the proceeds of the Bonds were used; an exercise by a local, state or
Federal governmental unit of its power of eminent domain to take all or
substantially all of the project for which the proceeds of the Bonds were
used; changes in the economic availability of raw materials, operating
supplies or facilities or technological or other changes which render the
operation of the project for which the proceeds of the Bonds were used
uneconomic; changes in law or an administrative or judicial decree which
renders the performance of the agreement under which the proceeds of the Bonds
were made available to finance the project impossible or which creates
unreasonable burdens or which imposes excessive liabilities, such as taxes,
not imposed on the date the Bonds are issued on the issuer of the Bonds or the
user of the proceeds of the Bonds; an administrative or judicial decree
requires the cessation of a substantial part of the operations of the project
financed with the proceeds of the Bonds; an overestimate of the costs of the
project to be financed with the proceeds of the Bonds resulting in excess
proceeds of the Bonds which may be applied to redeem Bonds; or an
underestimate of a source of funds securing the Bonds resulting in excess
funds which may be applied to redeem Bonds. See "Trust Portfolio" and footnote
(3) in "Notes to Trust Portfolio." See also "Portfolio" above for possible
redemptions prior to initial stated call dates. Certain of the Bonds in the
Trust may have been purchased by the Trust at premiums over the par value
(principal amount) of such Bonds (see "Trust Portfolio"). To the extent
Certificateholders acquire their Units at a time Bonds are valued at a premium
over such par value and such Bonds are subsequently redeemed or prepaid at par
or for less than such valuations, Certificateholders will likely sustain
losses in connection with such redemptions or prepayments. For the tax effects
of Bond redemptions generally, see "Tax Status (Federal, State, Capital
Gains)."
To the best knowledge of the Sponsor there is no litigation pending as of
the Date of Deposit in respect of any Bonds which might reasonably be expected
to have a material adverse effect upon the Trust. At any time after the Date
of Deposit, litigation may be initiated on a variety of grounds with respect
to Bonds in the Trust. Such litigation, as, for example, suits challenging the
issuance of pollution control revenue bonds under environmental protection
statutes, may affect the validity of such Bonds or the tax-free nature of the
interest thereon. While the outcome of litigation of such nature can never be
entirely predicted, the Trust has received opinions of bond counsel to the
issuing authorities of each Bond on the date of issuance to the effect that
such Bonds have been validly issued and that the interest thereon is exempt
from Federal income tax. In addition, other factors may arise from time to
time which potentially may impair the ability of issuers to meet obligations
undertaken with respect to the Bonds.
10
OBJECTIVES OF THE TRUST
The Trust has been formed to provide residents of the State of Nebraska
interest income which is exempt from Federal and Nebraska state income taxes.
In addition, the Trust also has objectives which include conservation of
capital and liquidity of investment. There is no assurance that the Trust's
objectives will be met.
In selecting Bonds for the Trust, the following facts, among others, were
considered by the Sponsor: (a) either the Standard & Poor's rating of the
Bonds was in no case less than "BBB-" or the Moody's Investors Service, Inc.
rating of the Bonds was in no case less than "Baa3" including provisional or
conditional ratings, respectively, or, if not rated, the Bonds had, in the
opinion of the Sponsor, credit characteristics sufficiently similar to the
credit characteristics of interest-bearing tax-exempt obligations that were so
rated as to be acceptable for acquisition by the Trust (see "Description of
Bond Ratings") and (b) the prices of the Bonds relative to other bonds of
comparable quality and maturity. Medium-quality Bonds (rated BBB or A by S&P
or Baa or A by Moody's) are obligations of issuers that are considered to
possess adequate, but not outstanding, capacities to service the obligations.
Investment in medium-quality debt securities involves greater investment risk,
including the possibility of issuer default or bankruptcy, than investment in
higher-quality debt securities. An economic downturn could severely disrupt
this market and adversely affect the value of outstanding bonds and the
ability of the issuers to repay principal and interest. During a period of
adverse economic changes, including a period of rising interest rates, issuers
of such bonds may experience difficulty in servicing their principal and
interest payment obligations. Medium quality debt securities tend to be less
marketable than higher-quality debt securities because the market for them is
less broad. During periods of thin trading in these markets, the spread
between bid and asked prices is likely to increase significantly, and the
Trust may have greater difficulty selling the medium-quality debt securities
in its portfolio. Subsequent to the Date of Deposit, a Bond may cease to be
rated or its rating may be reduced below the minimum required as of the Date
of Deposit. Neither event requires elimination of such Bond from a portfolio
but may be considered in the Sponsor's determination as to whether or not to
direct the Trustee to dispose of the Bond (see "Trustee Information").
The Trust consists of a portfolio of fixed rate, long-term debt
obligations. An investment in the Trust should be made with an understanding
of the risks associated with an investment in such obligations. Fluctuations
in interest rates may cause corresponding fluctuations in the value of the
Bonds in the portfolio. The Sponsor cannot predict whether the value of the
Bonds in the portfolio will increase or decrease.
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN
As of the business day prior to the Date of Deposit, the Estimated Current
Return and the Estimated Long-Term Return were as set forth in "Summary of
Essential Financial Information." Estimated Current Return is calculated by
dividing the estimated net annual interest income per Unit by the Public
Offering Price. The estimated net annual interest income per Unit will vary
with changes in fees and expenses of the Trustee and the Evaluator and with
the principal prepayment, redemption, maturity, exchange or sale of Securities
while the Public Offering Price will vary with changes in the offering price
of the underlying Securities; therefore, there is no assurance that the
present Estimated Current Return will be realized in the future. Estimated
Long-Term Return is calculated using a formula which 1) takes into
consideration, and determines and factors in the relative weightings of, the
market values, yields (which takes into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all of the
Securities in the Trust and 2) takes into account the expenses and sales
charge associated with each Trust Unit. Since the market values and estimated
11
retirements of the Securities and the expenses of the Trust will change, there
is no assurance that the present Estimated Long-Term Return will be realized
in the future. Estimated Current Return and Estimated Long-Term Return are
expected to differ because the calculation of Estimated Long-Term Return
reflects the estimated date and amount of principal returned while the
Estimated Current Return calculation includes only net annual interest income
and Public Offering Price. Neither rate reflects the true return to
Certificateholders which is lower because neither includes the effect of the
delay in the first payment to Certificateholders.
In order to acquire certain of the Bonds contracted for by the Sponsor for
deposit in the Trust, it may be necessary for the Sponsor or Trustee to pay on
the settlement dates for delivery of such Bonds amounts covering accrued
interest on such Bonds which exceed 1) the amounts paid by Certificateholders
and 2) the amounts which will be made available through cash furnished by the
Sponsor on the Date of Deposit, which amount of cash may exceed the interest
which would accrue to the First Settlement Date. The Trustee has agreed to pay
any amounts necessary to cover any such excess and will be reimbursed
therefor, without interest, when funds become available from interest payments
on the particular Bonds with respect to which such payments may have been
made.
PUBLIC OFFERING INFORMATION
Units in the Trust are offered at the Public Offering Price which during
the initial public offering period is based on the offering prices of the
Bonds in the Trust plus a sales charge of 4.90% of the Public Offering Price
(equivalent to 5.152% of the net amount invested) 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
net amount invested) 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 the 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>
Any reduced sales charge shall be the responsibility of the selling
dealer. The reduced sales charge will apply on all purchases of Units in the
Trust made by the same person on any one day from any one dealer. Units
purchased in the name of the spouse of a purchaser or in the name of a child
of any such purchaser under 21 years of age will be deemed for the purposes of
calculating the applicable sales charge to be a single
purchase by the purchaser. The reduced sales charges will also be applicable
to a trustee or other fiduciary purchasing Units for a single trust estate or
single fiduciary account.
12
Although payment is normally made 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 Trust available to their
customers on an agency basis. A portion of the sales charge paid by their
customers is retained by or remitted to the banks in an amount allowing a
concession equal to that shown above for dealers. Under the Glass-Steagall
Act, banks are prohibited from underwriting Trust Units; however, the Glass-
Steagall Act does permit certain agency transactions and the banking
regulators have indicated that these particular agency transactions are
permitted under such Act.
To facilitate the handling of transactions during the initial public
offering period, sales of Units shall normally be limited to transactions
involving a minimum of five Units. Further purchases may be made in multiples
of one Unit. The minimum purchase in the secondary market will be one Unit.
The Sponsor reserves the right to reject, in whole or in part, any order
for the purchase of Units and to change the amount of the concession to
dealers, set forth below, from time to time.
ACCRUED INTEREST
Accrued interest is the accumulation of unpaid interest on a bond from the
last day on which interest thereon was paid. Interest on Bonds in the Trust
is paid to the Trustee either monthly or semi-annually. However, interest on
the Bonds in the Trust is accounted for daily on an accrual basis. Because of
this, the Trust always has an amount of interest earned but not yet collected
by the Trustee because of coupons that are not yet due. For this reason, with
respect to sales settling subsequent to the First Settlement Date, the Public
Offering Price of Units will have added to it the proportionate share of
accrued and undistributed interest to the date of settlement.
Certificateholders will receive on the next distribution date of the Trust the
amount, if any, of accrued interest paid on their Units.
In an effort to reduce the amount of accrued interest which would
otherwise have to be paid in addition to the Public Offering Price in the sale
of Units to the public, the Trustee will advance the amount of accrued
interest as of the First Settlement Date and the same will be distributed to
the Sponsor, as the Certificateholder of record on such date. Consequently,
the amount of accrued interest to be added to the Public Offering Price of
Units will include only accrued interest arising after the First Settlement
Date of the Trust, less any distributions from the Interest Account subsequent
to this First Settlement Date. Since the First Settlement Date is the date of
settlement for anyone ordering Units on the Date of Deposit, no accrued
interest will be added to the Public Offering Price of Units ordered on the
Date of Deposit.
13
Because of the varying interest payment dates of the Bonds, accrued
interest at any point in time will be greater than the amount of interest
actually received by the Trust and distributed to Certificateholders.
Therefore, there will always remain an item of accrued interest that is added
to the value of the Units. If a Certificateholder sells or redeems all or a
portion of his Units, he will be entitled to receive his proportionate share
of the accrued interest from the purchaser of his Units. Since the Trustee
has use of the funds held in the Interest Account for distributions to
Certificateholders and since such Account is non-interest-bearing to
Certificateholders, the Trustee benefits thereby.
REDEMPTION AND REPURCHASE OF UNITS
Certificateholders may redeem all or a portion of their Units by tender to
the Trustee, at its corporate office in Kansas City, Missouri, of the
certificates representing Units to be redeemed, duly endorsed or accompanied
by proper instruments of transfer with signature guaranteed. In order to
effect a redemption of Units, Certificateholders must tender their
certificates to the Trustee or provide satisfactory indemnity required in
connection with lost, stolen or destroyed certificates. No redemption fee will
be charged. On the 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, or if the balance therein is insufficient, from the Principal
Account. All other amounts paid on redemption shall be withdrawn from the
Principal Account. In addition, the Trustee is empowered, with certain
recommendations allowed by the Sponsor, to sell Bonds in the portfolio of the
Trust to make funds available for redemption. Units redeemed shall be
cancelled and not be available for reissuance.
The recognized date of tender is deemed to be the date on which Units are
received in proper form by the Trustee prior to 3:00 p.m. Central time. Units
received by the Trustee after 3:00 p.m. will be deemed to have their
recognized date of tender on the next business day on which the New York Stock
Exchange is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the Redemption Price
computed on that date (see "Evaluation of the Trust").
To the extent that Bonds in the portfolio of the Trust are sold to meet
redemptions, the size and diversity of the Trust will be reduced. Such sales
may occur at a time when Bonds might not otherwise be sold which may result in
lower prices received on the Bonds than might be realized under normal trading
conditions.
Under regulations issued by the Internal Revenue Service, the Trustee will
be required to withhold a specified percentage of the principal amount of a
Unit redemption if the Trustee has not been furnished the redeeming
Certificateholder's tax identification number in the manner required by such
regulations. Any amount so withheld is transmitted to the Internal Revenue
Service and may be recovered by the Certificateholder only when filing his or
her tax return. Under normal circumstances the Trustee obtains the
14
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 the Trust and less any accrued Trust
expenses. If the supply of Units exceeds demand or if some other business
reason warrants it, the Sponsor may either discontinue all purchases of Units
or discontinue purchases of Units at such prices. In the event that a market
is not maintained for the Units and the Certificateholder cannot find another
purchaser, a Certificateholder desiring to dispose of his Units may be able to
dispose of such Units only by tendering them to the Trustee for redemption at
the redemption price, which is based upon the aggregate bid price of the Bonds
in the portfolio. The aggregate bid prices of the underlying Bonds in the
Trust are expected to be less than the related aggregate offering prices. A
Certificateholder who wishes to dispose of his Units should inquire of his
broker as to current market prices in order to determine whether there is in
existence any price in excess of the redemption price and, if so, the amount
thereof.
DISTRIBUTION OF INTEREST AND PRINCIPAL
Interest received by the Trust, including that part of the proceeds from
the disposition of Bonds, if any, which represents accrued interest, is
credited by the Trustee to the Interest Account for the Trust. Any other
receipts are credited to the Principal Account for the Trust. Interest
received by the Trust will be distributed on or shortly after the first day of
each month on a pro rata basis to Certificateholders of record as of the
preceding record date (which is the fifteenth day of the month next preceding
the distribution). All distributions will be net of applicable expenses. The
pro rata share of cash in the Principal Account will be computed on the
fifteenth day of each month and will be distributed to the Certificateholders
as of the first day of the next succeeding month. Such principal distribution
may be combined with any interest distribution due to the Certificateholder at
15
that time. Proceeds received from the disposition of any of the Bonds in the
portfolio of the Trust after each record date and prior to the following
distribution date will be held in the Principal Account and not distributed
until the next distribution date. The Trustee is not required to pay interest
on funds held in the Principal or Interest Accounts (but may itself earn
interest thereon and therefore benefit from the use of such funds) nor to make
a distribution from the Principal Account unless the amount available for
distribution shall equal at least $1.00 per Unit.
The distribution to the Certificateholders as of each record date after
the First Settlement Date will be made on the following distribution date or
shortly thereafter and shall consist of an amount substantially equal to the
Certificateholder's pro rata share of the estimated annual income after
deducting estimated expenses. Because interest payments are not received by
the Trust at a constant rate throughout the year, such interest distribution
may be more or less than the amount credited to the Interest Account as of the
record date. For the purpose of minimizing fluctuations in the distributions
from the Interest Account, the Trustee is authorized to advance such amounts
as may be necessary to provide interest distributions of approximately equal
amounts. The Trustee shall be reimbursed, without interest, for any such
advances from funds in the Interest Account on the ensuing record date. A
person who purchases Units will commence receiving distributions only after
such person becomes a record owner. Notification to the Trustee of the
transfer of Units is the responsibility of the purchaser, but in the normal
course of business such notice is provided by the selling broker/dealer.
As of the fifteenth day of each month, the Trustee will deduct from the
Interest Account and, to the extent funds are not sufficient therein, from the
Principal Account, amounts necessary to pay the expenses of the Trust (see
"Expenses of the Trust"). The Trustee may also withdraw from said accounts an
amount, if deemed necessary, to fund a reserve for any governmental charges or
anticipated Trust expenses which may be payable out of the Trust. Amounts so
withdrawn will not be considered a part of the Trust's assets until such time
as the Trustee shall return all or part of the amount withdrawn to the
appropriate accounts. In addition, the Trustee may withdraw from the Interest
and Principal Accounts such amounts as may be necessary to cover purchases of
Replacement Bonds and redemptions of Units by the Trustee (see "Description of
Trust Portfolio" and "Redemption and Repurchase of Units").
Funds which are available for future distributions, redemptions and
payment of expenses are held in accounts which are non-interest bearing to
Certificateholders and are available for use by the Trustee pursuant to normal
banking procedures.
DISTRIBUTION REINVESTMENT OPTION
The Sponsor has entered into an arrangement with Ranson Managed Portfolios
- - The Nebraska Municipal Fund (the "Nebraska Municipal Fund") which permits
any Certificateholder of The Nebraska Tax-Exempt Trust to elect to have each
distribution of interest income or principal, including capital gains, on his
Units automatically reinvested in shares of the Nebraska Municipal Fund. The
investment objective of the Nebraska Municipal Fund is to provide its
shareholders with a high level of current income exempt from both Federal
income tax and Nebraska state income tax as is consistent with preservation of
capital. The objectives and policies of the Nebraska Municipal Fund are
presented in more detail in the Nebraska Municipal Fund prospectus.
Certificateholders should contact the broker from whom they obtained this
Prospectus to obtain a current prospectus for the Nebraska Municipal Fund, or
they may obtain a current prospectus by contacting Ranson Capital Corporation
at (800) 345-2363.
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Certificateholders will be able to reinvest their distributions of
interest income or principal in the Nebraska Municipal Fund with no sales
charge and no minimum investment.
A Certificateholder may at any time, by so notifying the Trustee in
writing, elect to terminate his participation in the Distribution Reinvestment
Option and receive future distributions on his Units in cash. There will be no
charge or other penalty for such termination. The Sponsor and the 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 and
Nebraska income taxation 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 Nebraska state income tax purposes. It should be
noted in this connection that such gain does not include any amounts received
in respect of accrued interest or earned original issue discount, if any. It
should be noted that under recently enacted legislation described below, that
subjects accretion of market discount on tax-exempt bonds to taxation as
ordinary income, gain realized on the sale or redemption of Bonds by the
Trustee or of Units by a Certificateholder that would have been treated as
capital gain under prior law is treated as ordinary income to the extent it is
attributable to accretion of market discount. Market discount can arise based
on the price the Trust pays for Bonds or the price a Certificateholder pays
for his Units. Neither the Sponsor nor its counsel have made any special
review for the Trust of the proceedings relating to the issuance of the Bonds
or of the bases for such opinions.
In the opinion of Chapman and Cutler, counsel for the Sponsor, under
existing law:
1) the Trust is not an association taxable as a corporation for Federal
income tax purposes and interest and accrued original issue discount on
the Bonds which is excludable from gross income under the Internal Revenue
Code of 1986 (the "Code") will retain its status when distributed to
Certificateholders. A Certificateholder's share of the interest on certain
Bonds in the Trust will be included as an item of tax preference for both
individuals and corporations subject to the alternative minimum tax ("AMT
Bonds"). In the case of certain corporations owning Units, interest and
accrued original issue discount with respect to Bonds other than AMT Bonds
held by the Trust may be subject to the alternative minimum tax, an
additional tax 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 Trust under subpart E, subchapter J of Chapter 1 of the
Code and will have a taxable event when the Trust disposes of a Bond or
when the Certificateholder redeems or sells Units. 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
17
disposes of Bonds (whether by sale, payment on maturity, redemption or
otherwise), gain or loss is recognized to the Certificateholder. The
amount of any such gain or loss is measured by comparing the
Certificateholder's pro rata share of the total proceeds from such
disposition with the Certificateholder's basis for his or her fractional
interest in the asset disposed of. In the case of a Certificateholder who
purchases Units, such basis (before adjustment for earned original issue
discount and amortized bond premium, if any) is determined by apportioning
the cost of the Units among each of the Trust assets ratably according to
value as of the date of acquisition of the Units. The basis of each Unit
and of each Bond which was issued with original issue discount must be
increased by the amount of accrued original issue discount and the basis
of each Unit and of each Bond which was purchased by the Trust at a
premium must be reduced by the annual amortization of Bond premium. The
tax cost reduction requirements of said Code relating to amortization of
bond premium may, under some circumstances, result in the
Certificateholder realizing a taxable gain when his Units are sold or
redeemed for an amount equal to his original cost. A Certificateholder
will realize a taxable gain when his Units are sold or redeemed for an
amount greater than his adjusted basis in his Units at the time of such
sale or redemption.
Sections 1288 and 1272 of the Code provide a complex set of rules
governing the accrual of original issue discount. These rules provide that
original issue discount accrues either on the basis of a constant compound
interest rate or ratably over the term of the Bond, depending on the date the
Bond was issued. In addition, special rules apply if the purchase price of a
Bond exceeds the original issue price plus the amount of original issue
discount which accrued to prior owners. The application of these rules will
also vary depending on the value of the Bond on the date a Certificateholder
acquires his Units and the price the Certificateholder pays for his Units.
Investors with questions regarding these Code sections should consult with
their tax advisers.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-
exempt bonds to the market discount rules of the Code effective for bonds
purchased after April 30, 1993. In general, market discount is the amount (if
any) by which the stated redemption price at maturity exceeds an Investor's
purchase price (except to the extent that such difference, if any, is
attributable to original issue discount not yet accrued). Under the Tax Act,
accretion of market discount is taxable as ordinary income; under prior law
the accretion had been treated as capital gain. Market discount that accretes
while the Trust holds a Bond would be recognized as ordinary income by the
Certificateholders when principal payments are received on the Bond, upon sale
or at redemption (including early redemption) or upon the sale or redemption
of the Units, unless a Certificateholder elects to include market discount in
taxable income as it accrues. The market discount rules are complex and
Certificateholders should consult their tax advisers regarding these rules and
their application.
Interest on certain "specified private activity bonds" held by the Trust
will be treated as an item of tax preference for purposes of computing the
alternative minimum tax of all Certificateholders of the Trust, including
individuals. As a result, such interest income may be subject to the
alternative minimum tax. The Trust will annually supply Certificateholders
with information regarding the amount of Trust income attributable to those
"specified private activity bonds" held by the Trust that give rise to a
specific item of tax preference. Certificateholders should consult their tax
adviser regarding the potential application of the alternative minimum tax and
the impact of a portion of the Trust's income being characterized as a tax
preference.
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For purposes of computing the alternative minimum tax for individuals and
corporations and the Superfund Tax for corporations, interest on certain
private activity bonds (which includes most industrial and housing revenue
bonds) issued on or after August 8, 1986 such as the AMT Bonds, is included as
an item of tax preference.
In the case of corporations, for taxable years beginning after December
31, 1986, the alternative minimum tax and the Superfund Tax depend upon the
corporation's alternative minimum taxable income, which is the corporation's
taxable income with certain adjustments. One of the adjustment items used in
computing the alternative minimum taxable income and the Superfund Tax of a
corporation (other than an S Corporation, Regulated Investment Company, Real
Estate Investment Trust, or REMIC) is an amount equal to 75% of the excess of
such corporation's "adjusted current earnings" over an amount equal to its
alternative minimum taxable income (before such adjustment item and the
alternative tax net operating loss deduction). "Adjusted current earnings"
includes all tax-exempt interest, including interest on the Bonds in the
Trust. Corporate Certificateholders are urged to consult their tax advisers
with respect to the particular tax consequences to them, including the
corporate alternative minimum tax, Superfund Tax and the branch profits tax
imposed by Section 884 of the Code.
The Code provides that interest on indebtedness incurred or continued to
purchase or carry obligations, the interest on which is wholly exempt from
Federal income taxes, is not deductible. Because each Certificateholder is
treated for Federal income tax purposes as the owner of a pro rata share of
the Bonds owned by the Trust, interest on borrowed funds used to purchase or
carry Units of the Trust will not be deductible for Federal income tax
purposes. Under rules used by the Internal Revenue Service for determining
when borrowed funds are considered used for the purpose of purchasing or
carrying particular assets, the purchase of Units may be considered to have
been made with borrowed funds even though the borrowed funds are not directly
traceable to the purchase of Units. However, these rules generally do not
apply to interest paid on indebtedness incurred for expenditures of a personal
nature such as a mortgage incurred to purchase or improve a personal
residence. Federally tax-exempt income, including income on Units of the
Trust, will be taken into consideration in computing the portion, if any, of
social security benefits received that will be included in a taxpayer's gross
income subject to Federal income tax. It should be noted that under the Tax
Act, the proportion of social security benefits subject to inclusion in
taxable income has been raised for taxable years starting in 1994. Under
Section 265 of the Code, certain financial institutions that acquire Units
would generally not be able to deduct any of the interest expense attributable
to ownership of such Units. Investors with questions regarding these issues
should consult with their tax advisers.
For taxpayers other than corporations, net capital gains are subject to a
maximum rate of 28 percent. However, it should be noted that legislative
proposals are made from time to time that affect tax rates and could affect
relative differences at which ordinary income and capital gains are taxed.
Under the Code, taxpayers must disclose to the Internal Revenue Service
the amount of tax-exempt interest earned during the year.
In the case of certain of the Bonds in the Trust, the opinions of bond
counsel indicate that interest on such securities received by a "substantial
user" of the facilities being financed with the proceeds of these securities,
or persons related thereto, for periods while such securities are held by such
a user or related person, will not be excludable from Federal gross income,
although interest on such securities received by others would be excludable
19
from Federal gross income. "Substantial user" and "related person" are defined
under U.S. Treasury Regulations. Any person who believes that he or she may be
a "substantial user" or a "related person" as so defined should contact his or
her tax adviser.
NEBRASKA TAXATION. With respect to certain Bonds in the Trust (the
"Nebraska Bonds") which may be held by the 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 Unitholder, 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 Trust is not an association taxable as a corporation, each
Certificateholder of the Trust will be treated as the owner of a pro rata
portion of the Trust, and the income of such portion of the 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 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 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 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 Trust and
distributed to a Certificateholder;
(4) Each Certificateholder of the 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 Trust to the extent that
such a transaction results in a recognized gain or loss to such
Certificateholder for Federal income tax purposes;
20
(5) 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 Trust, the interest on which is exempt from such Tax, and
(6) In the case of a Certificateholder subject to the Nebraska
financial institutions franchise tax, the income derived by such
Certificateholder from his pro rata portion of the Bonds held by the 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 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) The Trust is not an association taxable as a corporation for Missouri
income tax purposes.
(ii) The Certificateholders of the Trust will be treated as the owners of a
pro rata portion of the Trust and the income of the Trust will therefore be
treated as income of the Certificateholders under Missouri law.
(iii) The Trust will not be subject to the Kansas City, Missouri Earnings
and Profits Tax and each Certificateholder's share of the Trust will not
generally be subject to the Kansas City, Missouri Earnings and Profits Tax
or the City of St. Louis Earnings Tax (except in the case of certain
Certificateholders, including corporations, otherwise subject to the
St. Louis City Earnings Tax).
All statements of law in the Prospectus concerning exemption from Federal,
state or other taxes are the opinion of counsel and are to be so construed.
EXPENSES OF THE TRUST
The Sponsor has borne the costs of establishing the Trust, including the
cost of initial preparation, printing and execution of the Indenture and the
certificates, legal and accounting expenses, advertising expenses, selling
expenses, expenses of the Trustee, initial fees for evaluations and other out-
of-pocket expenses, at no cost to the Trust. The Sponsor will not receive any
fees in connection with activities relating to the Trust. However, for
regularly evaluating the portfolio of the Trust, the Evaluator (which is the
Sponsor) will receive that minimum annual fee set forth under "Summary of
Essential Financial Information" which fee is based on the largest aggregate
amount of Bonds in the Trust at any time during such period. This fee may
exceed the actual costs of providing such evaluation services for this Trust,
but at no time will the total amount received for evaluation services rendered
to unit investment trust of which Ranson Capital Corporation is the Sponsor in
any calendar year exceed the aggregate cost to the Sponsor of supplying such
services in such year.
The Trustee will receive for ordinary services that annual fee set forth
under "Summary of Essential Financial Information", which fee is based on the
largest aggregate amount of Bonds in the Trust at any time during such period.
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
21
no longer published, in a comparable index. In addition, the Trustee's fee may
be periodically adjusted in response to fluctuations in short-term interest
rates (reflecting the cost to the Trustee of advancing funds to the Trust to
meet scheduled distributions). Since the Trustee has the use of the funds
being held in the Principal and Interest Accounts for future distributions,
payment of expenses and redemptions and since such Accounts are non-interest
bearing to Certificateholders, the Trustee benefits thereby. Part of the
Trustee's compensation for its services to the Trust is expected to result
from the use of these funds. For a discussion of the services rendered by the
Trustee pursuant to its obligations under the Indenture, see "Trustee
Information" and "Other Rights of Certificateholders."
The following is a summary of expenses of the Trust which, when owed to
the Trustee, are secured by a lien on the assets of the Trust: 1) the expenses
and costs of any action undertaken by the Trustee to protect the Trust and the
rights and interests of the Certificateholders; 2) any taxes and other
governmental charges upon the Bonds or any part of the Trust (no such taxes or
charges are currently being levied, or, to the knowledge of the Sponsor,
contemplated); 3) amounts payable to the Trustee as fees for ordinary
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
the Trust in order to pay these amounts if funds are not available in the
Interest and Principal Accounts. Costs of disbursement (including postage,
checks and handling) of interest, principal and redemption distributions will
be paid by the Trustee and will not be charged to the Trust.
EVALUATION OF THE TRUST
As of the opening of business on the Date of Deposit, the price of the
Units was determined on the basis of an initial evaluation of the Bonds in the
Trust prepared by Stern Brothers & Co., a firm regularly engaged in the
business of evaluating, quoting or appraising comparable securities. After the
opening of business on the Date of Deposit and during the period of initial
public offering, the Evaluator, Ranson Capital Corporation, will appraise or
cause to be appraised daily the value of the underlying Bonds as of 3:00 P.M.
Central time on days the New York Stock Exchange is open and will adjust the
Public Offering Price of the Units commensurate with such appraisal. Such
Public Offering Price will be effective for all orders received at or prior to
3:00 P.M. Central time on each such day. Orders received by the Trustee or
Sponsor for purchases, sales or redemptions after that time, or on a day when
the New York Stock Exchange is closed, will be held until the next
determination of price. While the Trustee has the power to determine the
Redemption Price per Unit when Units are tendered for redemption, such
authority has been delegated to the Evaluator which determines the Redemption
Price per Unit on a daily basis on days the New York Stock Exchange is open
(and on any other days on which Sponsor secondary market transactions or
redemptions occur). Each evaluation of the Trust has been and will be
determined on the basis of cash on hand in the Trust or money in the process
of being collected, the value of the Bonds in the portfolio of the Trust based
on the bid prices of the Bonds and interest accrued thereon not subject to
collection less any taxes or governmental charges payable, any accrued
expenses of the Trust and any cash held for distribution to
Certificateholders. The result of that computation is then divided by the
number of Units outstanding as of the date thereof to determine the per Unit
value of the Trust.
The Evaluator may determine the value of the Bonds in the portfolio of the
Trust 1) on the basis of current bid prices of the Bonds obtained from dealers
or brokers who customarily deal in bonds comparable to those held in the
Trust; 2) if bid prices are not available for any of the Bonds, on the basis
22
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 any
interest accrued but undistributed. The secondary market Public Offering Price
and the Redemption Price per Unit are based on the bid price per Unit of the
Bonds in the portfolio of the Trust plus the applicable sales charge and
accrued interest. The offering price of Bonds in the portfolio of the Trust
may be expected to range from 1%-2% more than the bid price of such Bonds. On
the Date of Deposit, the offering side evaluation of the Bonds in the
portfolio of the Trust was higher than the bid side evaluation of such Bonds
by 1.3% of the aggregate principal amount of such Bonds.
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 the Trust a
statement 1) as to the Interest Account for the Trust; interest received
(including amounts representing interest received upon any disposition of
Bonds), deductions for fees and expenses of the Trust, for purchases of
Replacement Bonds and for redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed in each case both
as a total dollar amount and as a dollar amount representing the pro rata
share of each Unit outstanding on the last business day of such calendar year;
2) as to the Principal Account for the 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 accounts are required to be audited annually, at the Trust's expense,
by independent auditors designated by the Sponsor, unless the Sponsor
determines that such an audit would not be in the best interest of the
Certificateholders. The accountants' report will be furnished by the Trustee
to any Certificateholder 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 Trust furnished to it by the Evaluator.
23
The Trustee is authorized to treat as the record owner of Units that
person who is registered as such owner on the books of the Trustee. Ownership
of Units of the Trust is evidenced by separate registered certificates
executed by the Trustee and the Sponsor. Certificates are transferable by
presentation and surrender to the Trustee properly endorsed or accompanied by
a written instrument or instruments of transfer. A Certificateholder must sign
exactly as his name appears on the face of the certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion
Program ("STAMP") or such other signature guaranty 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 Trust and of Series
51 - 72 of the Kansas Tax-Exempt Trust. Ranson & Company, Inc. was originally
organized in Kansas in 1935 as the Ranson-Davidson Company. In 1955, S. H.
Ranson, Jr. purchased the Davidson interest and the name was changed to Ranson
& Company, Inc. During its fifty year history, Ranson & Company, Inc. 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 Nebraska Municipal
Fund, the Kansas Municipal Fund and the Kansas Insured Municipal Fund -
Limited Maturity, and serves as the financial advisor and as an underwriter
for issuers in the Midwest and Southwest, especially in Kansas, Missouri and
Texas.
The Sponsor's offices are located at 120 South Market, Suite 450, Wichita,
Kansas 67202. As of December 31, 1994, the total unaudited stockholders'
equity of Ranson Capital Corporation was $974,242. (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 the
Trust (which is based on the aggregate offering price of the Bonds in the
portfolio of the Trust on the Date of Deposit as determined by Stern Brothers
& Co.). See "Trust Portfolio." The Sponsor may also realize profits or sustain
losses with respect to Bonds deposited in the Trust which were acquired by the
24
Sponsor from underwriting syndicates of which it was a member. The Sponsor has
participated as sole underwriter or as manager or as a member of the
underwriting syndicate from which none of the aggregate principal amount of
the Bonds in the portfolio of the Trust was acquired. The Sponsor may realize
additional profit or loss during the initial offering period as a result of
the possible fluctuations in the market value of the Bonds in the Trust after
the Date of Deposit.
As stated under "Redemption and Repurchase of Units," the Sponsor intends
to maintain a secondary market for the Units of the Trust. In so maintaining a
market, the Sponsor will also realize profits or sustain losses in the amount
of any difference between the price at which Units are purchased and the price
at which Units are resold (which price is based on the bid prices of the Bonds
in the Trust and includes a sales charge of 5.50%). In addition, the Sponsor
will also realize profits or sustain losses resulting from a redemption of
such repurchased Units at a price above or below the purchase price for such
Units.
If the Sponsor shall fail to perform any of its duties under the Indenture
or become incapable of acting or become bankrupt or its affairs are taken over
by public authorities, then the Trustee may (i) appoint a successor Sponsor at
rates of compensation deemed by the Trustee to be reasonable and not exceeding
amounts prescribed by the Securities and Exchange Commission, (ii) terminate
the Indenture and liquidate the Trust as provided therein or (iii) continue to
act as Trustee without terminating the Indenture.
TRUSTEE INFORMATION
The Trustee, Investors Fiduciary Trust Company, is a trust company
specializing in investment related services, organized and existing under the
laws of Missouri, having its trust office at 127 West 10th Street, Kansas
City, Missouri 64105. The Trustee is subject to supervision and examination
by the Division of Finance of the State of Missouri and the Federal Deposit
Insurance Corporation. The Trustee is jointly owned by DST Systems, Inc. and
Kemper Financial Services, Inc. On September 27, 1994, State Street Boston
Corporation entered into an agreement to acquire Investors Fiduciary Trust
Company. The acquisition is not expected to have an effect on the operation of
the Trust.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Bonds for the Trust portfolio. The Trustee is
empowered to sell, for the purpose of redeeming Units tendered by any
Certificateholder and for the payment of expenses for which funds may not be
available, such of the Bonds as are designated by the Sponsor as the Trustee
in its sole discretion may deem necessary. The Sponsor is empowered, but not
obligated, to direct the Trustee to dispose of Bonds upon default in payment
of principal or interest, institution of certain legal proceedings, default
under other documents adversely affecting debt service, default in payment of
principal or interest on other obligations of the same issuer, decline in
projected income pledged for debt service on revenue bonds or decline in price
or the occurrence of other market or credit factors, including advance
refunding (i.e., the issuance of refunding securities and the deposit of the
proceeds thereof in trust or escrow to retire the refunded securities on their
respective redemption dates), so that in the opinion of the Sponsor the
retention of such Bonds would be detrimental to the interest of the
Certificateholders. The Sponsor is required to instruct the Trustee to reject
any offer made by an issuer of any of the Bonds to issue new obligations in
exchange or substitution for any Bond pursuant to a refunding or refinancing
plan, except that the Sponsor may instruct the Trustee to accept or reject
such an offer or to take any other action with respect thereto as the Sponsor
may deem proper if (1) the issuer is in default with respect to such Bond or
(2) in the written opinion of the Sponsor the issuer will probably default
25
with respect to such Bond in the reasonably foreseeable future. Any obligation
so received in exchange or substitution will be held by the Trustee subject to
the terms and conditions of the Indenture to the same extent as Bonds
originally deposited thereunder. Within five days after the deposit of
obligations in exchange or substitution for underlying Bonds, the Trustee is
required to give notice thereof to each Certificateholder, identifying the
Bonds eliminated and the Bonds substituted therefor. Except as stated herein
and under "Description of Trust Portfolio" regarding the substitution of
Replacement Bonds for Failed Bonds, the acquisition by the Trust of any
securities other than the Bonds initially deposited is not permitted.
If any default in the payment of principal or interest on any Bond occurs
and no provision for payment is made therefor within 30 days, the Trustee is
required to notify the Sponsor thereof. If the Sponsor fails to instruct the
Trustee to sell or to hold such Bond within 30 days after notification by the
Trustee to the Sponsor of such default, the Trustee may in its discretion sell
the defaulted Bond and not be liable for any depreciation or loss thereby
incurred.
In accordance with the Indenture, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the certificates issued by
the Trust to, every Certificateholder of the Trust. Such books and records
shall be open to inspection by any Certificateholder at all reasonable times
during the usual business hours. The Trustee shall make such annual or other
reports as may from time to time be required under any applicable state or
Federal statute, rule or regulation. The Trustee is required to keep a
certified copy or duplicate original of the Indenture on file in its office
available for inspection at all reasonable times during the usual business
hours by any Certificateholder, together with a current list of the Bonds held
in the Trust.
Under the Indenture, the Trustee or any successor trustee may resign and
be discharged of the trust created by the Indenture by executing an instrument
in writing and filing the same with the Sponsor. The Trustee or successor
trustee must mail a copy of the notice of resignation to all
Certificateholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Indenture at any time or without cause.
Notice of such removal and appointment shall be mailed to each
Certificateholder by the Sponsor. Upon execution of a written acceptance of
such appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a corporation organized under the laws of the United States, or any
state thereof, be authorized under such laws to exercise trust powers and have
at all times an aggregate capital, surplus and undivided profits of not less
than $5,000,000.
26
UNDERWRITING
<TABLE>
The Underwriters named below have severally purchased Units in the
following respective amounts from the Sponsor.
<CAPTION>
NAME ADDRESS UNITS
<S> <C> <C>
Ranson Capital Corporation 120 S. Market, Suite 450 1,410
Wichita, Kansas 67202
Edward D. Jones & Co. 201 Progress Parkway 750
Maryland Heights, Missouri 63043
Robert W. Baird & Co. Incorporated 777 E. Wisconsin Avenue 350
Milwaukee, Wisconsin 53202
</TABLE>
Underwriters and broker-dealers of the Trust are eligible to participate
in a program in which such firms receive from the Sponsor a nominal award for
each of their registered representatives who have sold a minimum number of
units of unit investment trust created by the Sponsor during a specified time
period. In addition, at various times the Sponsor may implement other programs
under which the sales force of an Underwriter, broker or dealer may be
eligible to win other nominal awards for certain sales efforts, or under which
the Sponsor will reallow to any such Underwriter, broker or dealer that
sponsors sales contests or recognition programs conforming to criteria
established by the Sponsor, or participates in sales programs sponsored by the
Sponsor, an amount not exceeding the total applicable sales charges on the
sales generated by such person at the public offering price during such
programs. Also, the Sponsor in its discretion may from time to time pursuant
to objective criteria established by the Sponsor pay fees to qualifying
Underwriters, brokers or dealers for certain services or activities which are
primarily intended to result in sales of Units of the Trust. Such payments are
made by the Sponsor out of its own assets, and not out of the assets of the
Trust. These programs will not change the price Certificateholders pay for
their Units or the amount that the Trust will receive from the Units sold.
Units may also be sold to dealers at prices representing the per Unit
concession stated under "Public Offering Information." However, resales of
Units by such dealers to the public will be made at the Public Offering Price
described in the Prospectus. The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units and the right to change
the amount of the concession from time to
time. Underwriters will acquire Units from the Sponsor based on the amount of
Units underwritten. The concessions from the Public Offering Price will be as
set forth in the following table:
<TABLE>
<CAPTION>
100-249 250-499 Units 500-999 Units 1,000 or More Units
Underwritten Underwritten Underwritten Underwritten
<C> <C> <C> <C>
3.50% 3.60% 3.80% 4.00%
</TABLE>
27
In addition, the Sponsor has agreed to provide Underwriters with an
additional concession of $2.50 per Unit for committing to underwrite a total
of 1,000 or more Units.
LEGAL AND AUDITING MATTERS
The legality of the Units offered hereby and certain matters relating to
Federal 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 portfolio, of the Trust
at the opening of business on January 19, 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:
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.
28
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 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
29
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.
Con. (--)-Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by a) earnings of projects under construction, b) earnings
of projects unseasoned in operation experience, c) rentals which begin when
facilities are completed, or d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
TAX-EXEMPT/TAXABLE ESTIMATED CURRENT RETURN EQUIVALENTS
As of the date of this Prospectus, the following table shows the
approximate taxable estimated current returns for individuals that are
equivalent to tax-exempt estimated current returns under combined Federal and
state taxes, using the published 1995 Federal and Nebraska tax rates scheduled
to be in effect*. The table incorporates increased tax rates for higher-income
taxpayers that were included in the Revenue Reconciliation Act of 1993. The
combined Federal and state tax brackets shown reflect the fact that state tax
payments are deductible for Federal tax purposes and that no deduction of the
Federal tax is claimed for state purposes. The table illustrates approximately
what you would have to earn on taxable investments to equal tax-exempt
estimated current returns in your income tax bracket under present tax law.
Locate your income (after deductions
30
and exemptions), then locate your tax bracket based on joint or single tax
filing. Read across to the equivalent taxable estimated current return you
would need to match tax-free income. The taxable equivalent estimated current
returns may be somewhat higher than the equivalent returns indicated in the
table below for those individuals who have Adjusted Gross Income in excess of
$114,700.
<TABLE>
<CAPTION>
Taxable Income Tax-Exempt Estimated Current Return
Single Joint
Return Return Tax 41/2% 5% 51/2% 6% 61/2% 7% 71/2%
In thousands Bracket Equivalent Taxable Estimated Current Returns
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 23.35 $ 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 table does not reflect the effect of two adjustments designed to phase-
out the advantage of itemized deductions and personal exemptions for higher
income taxpayers. These adjustments, in effect, increase the marginal
Federal tax rate above the stated marginal tax rate by eliminating a
portion of claimed itemized deductions and potentially eliminating entirely
the effect of personal exemptions in determining Taxable Income. The total
impact of the adjustments, which will vary from taxpayer to taxpayer, is
dependent upon the itemized deductions and personal exemptions claimed.
A comparison of tax-free and equivalent taxable estimated current returns with
the returns on various taxable investments is one element to consider in
making an investment decision. The Sponsor may from time to time in its
advertising and sales material compare the then current estimated returns on
the Trust and return over specified periods on other similar Ranson Capital
Corporation sponsored unit investment trusts with returns on taxable
investments such as corporate or U.S. Government bonds, bank CDs and money
market accounts or money market funds, each of which has investment
characteristics that may differ from those of the Trust. U.S. Government
bonds, for example, are backed by the full faith and credit of the U.S.
Government and bank CDs and money market accounts are insured by an agency of
the federal government. Money market accounts and money market funds provide
stability of principal, but pay interest at rates that vary with the condition
of the short-term debt market. The investment characteristics of the Trust are
described more fully elsewhere in this Prospectus.
31
REPORT OF ALLEN, GIBBS & HOULIK, L.C.
INDEPENDENT AUDITORS
CERTIFICATEHOLDERS
THE RANSON MUNICIPAL TRUST
MULTI-STATE SERIES 4 (THE NEBRASKA TAX-EXEMPT TRUST, SERIES 4):
We have audited the accompanying statement of net assets, including the
Trust portfolio, of The Ranson Municipal Trust, Multi-State Series 4 (The
Nebraska Tax-Exempt Trust, Series 4), as of the opening of business on
January 19, 1995, the Date of Deposit. This statement of net assets is the
responsibility of the Trust's Sponsor. Our responsibility is to express an
opinion on this statement of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statement of net assets is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of net
assets. Our procedures included confirmation of the Bonds held by the
Trustee at the opening of business on January 19, 1995. An audit also
includes assessing the accounting principles used and significant estimates
made by the Trust's Sponsor, as well as evaluating the overall statement of
net assets presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the statement of net assets referred to above presents
fairly, in all material respects, the financial position of The Ranson
Municipal Trust, Multi-State Series 4 (The Nebraska Tax-Exempt Trust, Series
4) at the opening of business on January 19, 1995, in conformity with
generally accepted accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
January 19, 1995
<TABLE>
THE KANSAS TAX-EXEMPT TRUST
<CAPTION>
MULTI-STATE SERIES 4 (THE NEBRASKA TAX-EXEMPT TRUST, SERIES 4)
STATEMENT OF NET ASSETS
AT THE OPENING OF BUSINESS ON January 19, 1995, THE DATE OF DEPOSIT
<S> <C>
TRUST PROPERTY
Investment in securities-
Bonds deposited in Trust (1) $ 2,382,505
Accrued interest to Date of Deposit on Bonds (2) 30,609
____________
2,413,114
Less distributions payable (2) 30,606
____________
Net assets, applicable to 3,100 outstanding Units of
fractional undivided interest $ 2,382,505
INTEREST OF CERTIFICATEHOLDERS
Cost to investors (3) $ 2,505,263
Less sales charge (3) 122,758
____________
Net proceeds to the Trust, equal to net assets $ 2,382,505
</TABLE>
[FN]
Notes:
(1) Aggregate cost to the Trust of the Bonds listed in the Trust Portfolio
is based on offering side evaluations determined by Stern Brothers & Co.
(2) Pursuant to the Indenture, the Trustee will advance funds in the amount
of $33,672 representing the accrued interest to January 26, 1995 (the
"First Settlement Date") and such advance will be distributed to the
Sponsor.
(3) The aggregate cost to investors (exclusive of interest) includes a
sales charge computed at the rate of 4.90% of the Public Offering Price
(equivalent to 5.152% of the net amount invested) assuming no reduction of
sales charge for quantity purchases.
32
<TABLE>
THE NEBRASKA TAX-EXEMPT TRUST, SERIES 4
TRUST PORTFOLIO AT THE OPENING OF BUSINESS ON JANUARY 19, 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>
$@@ 250,000 Nebraska Public Power District Electric System Aaa# 2002 @ 102 $ 248,698
Revenue Bonds, 1992 Series A (MBIA Insured) 2004 @ 100 S.F.
6.25% Due 1/1/2012
@@ 400,000 City of Omaha (Nebraska) Airport Facilities A# 2002 @ 102 452,520
Revenue Refunding Bonds, Series 1991, 8.375%, 2006 @ 100 S.F.
Due 1/1/2014
@@ 350,000 Nebraska Public Power District Power Supply A1# 2003 @ 102 338,359
System Revenue Bonds, 1993 Series, 6.125% Due 2005 @ 100 S.F.
1/1/2015
@@ 500,000 City of Lincoln, Nebraska Electric System AA 2003 @ 102 434,630
Revenue Refunding Bonds, 1993 Series A, 5.25% 2005 @ 100 S.F.
Due 9/1/2015
## 400,000 Nebraska Higher Education Loan Program, Inc. Aa# 2013 @ 100 S.F. 376,608
1993-2 Series A-5B Senior Subordinate Term
Bonds, 6.25% Due 6/1/2018
510,000 Hospital Authority No. 1 of Douglas County, Nebraska AAA 2001 @ 102 531,690
Hospital Revenue Bonds (Immanuel Medical Center, 2003 @ 100 S.F.
Inc.) Series 1991 (AMBAC Insured) 7.00% Due
9/1/2021
___________ ___________
$2,410,000 $2,382,505
</TABLE>
[FN]
See "Notes to Trust Portfolio."
NOTES TO TRUST PORTFOLIO:
(1) Contracts to acquire Bonds were entered into by the Sponsor during the
period January 4, 1995 through January 12, 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 Ratings Group, a division of McGraw-Hill, Inc. 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 Ratings Group, a division of McGraw-Hill, Inc. 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 Trust. "**" indicates
rating is contingent upon receipt by Standard & Poor's of final
documentation.
(3) There is shown under this heading the year in which each issue of Bonds
is initially redeemable and the redemption price for that year or, if
currently redeemable, the redemption price in 1995; unless otherwise
indicated, each issue continues to be redeemable at declining prices
thereafter, but not below par value. The prices at which the Bonds may be
redeemed or called prior to maturity may or may not include a premium and,
in certain cases, may be less than the cost of the Bonds to the Trust. In
addition, certain Bonds in the Trust portfolio may be redeemed in whole or
in part other than by operation of the stated redemption or sinking fund
provisions under certain unusual or extraordinary circumstances specified
in the instruments setting forth the terms and provisions of such Bonds.
"S.F." indicates a sinking fund is established with respect to an issue of
Bonds.
(4) During the initial offering period, evaluations of the Bonds are made
on the basis of current offering side evaluations of the Bonds. The
aggregate offering price is greater than the aggregate bid price of the
Bonds, which is the basis on which Redemption Prices will be determined
for purposes of redemption of Units after the initial offering period.
(5) Other information regarding the Bonds in the Trust, at the opening of
business on the Date of Deposit, is as follows:
<TABLE>
<CAPTION>
Cost of Bonds Profit To Annual Interest Bid Side Value
To Sponsor Sponsor Income To Trust Of Bonds
_____________ ________ ______________ _____________
<C> <C> <C> <C>
$2,908,295 $39,362 $184,955 $2,909,745
</TABLE>
34
(6) Approximately 17% of the aggregate principal amount of the Bonds in the
Trust are 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
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.
35
ESTIMATED CASH FLOWS TO CERTIFICATEHOLDERS
The table below sets forth the per Unit estimated monthly distribution of
interest, principal and rebates of accrued interest to carry to
Certificateholders. The table assumes no changes in expenses, no changes in
the current interest rates, no exchanges, redemptions, sales or prepayments of
the underlying Bonds prior to maturity or expected retirement date and the
receipt of principal upon maturity or expected retirement date. To the extent
the foregoing assumptions change, actual distributions will vary.
<TABLE>
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
__________________ ____________ ____________ ____________
<S> <C> <C> <C>
March 1995 $3.18 $ 0.00 $ 3.18
April 1995 - December 2011 5.01 0.00 5.01
January 2012 5.01 99.60 104.61
February 2012 - December 2013 4.51 0.00 4.51
January 2014 4.51 162.55 167.06
February 2014 - December 2014 3.43 0.00 3.43
January 2015 3.43 139.44 142.87
February 2015 - August 2015 2.74 0.00 2.74
September 2015 2.74 199.20 201.94
October 2015 - May 2018 1.91 0.00 1.91
June 2018 1.91 159.36 161.27
July 2018 - August 2021 1.11 0.00 1.11
September 2021 1.11 203.19 204.30
</TABLE>
36
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Trust, the Sponsor or any dealer. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, securities in any state to any
person to whom it is not lawful to make such offer in such state.
This Prospectus contains information concerning the Trust and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Trust has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
<TABLE>
TABLE OF CONTENTS
<CAPTION>
TITLE PAGE
_____ ____
<S> <C>
General Summary of Information 1
Summary of Essential Financial Information 3
Summary of the Trust 5
Description of Trust Portfolio 7
Objectives of the Trust 11
Estimated Current Return and Estimated Long-Term Return 11
Public Offering Information 12
Accrued Interest 13
Redemption and Repurchase of Units 14
Distribution of Interest and Principal 15
Distribution Reinvestment Option 16
Tax Status (Federal, State, Capital Gains) 17
Expenses of the Trust 21
Evaluation of the Trust 22
Other Rights of Certificateholders 23
Sponsor Information 24
Trustee Information 25
Underwriting 27
Legal and Auditing Matters 28
Description of Bond Ratings 28
Tax-Exempt/Taxable Estimated Current Return Equivalents 30
Report of Allen, Gibbs & Houlik, L.C. Independent Auditors 32
Statement of Net Assets 32
Trust Portfolio 33
Notes to Trust Portfolio 34
Estimated Cash Flows to Unitholders 35
</TABLE>
37
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants, evaluator,
rating services and legal counsel
The following exhibits:
1.1 Trust Agreement between Ranson Capital Corporation, as Depositor, and
Investors Fiduciary Trust Company, as Trustee (to be supplied by
ammendment).
3.1 Opinion and consent of Chapman and Cutler, special counsel to the
Depositor, as to legality of securities being registered (to be
supplied by amendment).
3.2 Opinion of Chapman and Cutler, special counsel to the Depositor, as to
Federal income tax and Kansas and Nebraska state income tax status of
securities being registered (to be supplied by amendment).
4.1 Consent of Stern Brothers & Co., special evaluator (to be supplied
by amendment).
4.2 Consent of Allen, Gibbs & Houlik, L.C. (to be supplied by amendment).
S-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
The Ranson Municipal Trust, Multi-State Series 5 has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Wichita and State of Kansas on the
4th day of April, 1995.
THE RANSON MUNICIPAL TRUST, MULTI-STATE SERIES 5
(Registrant)
By RANSON CAPITAL CORPORATION
(Depositor)
Attest John A. Ranson
____________________
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
and on April 4, 1995.
Signature Title )
John A. Ranson President, Chief Executive
__________________ Officer and Director
Alex R. Meitzner Executive Vice President
__________________ and Director
Robin K. Pinkerton Secretary, Treasuer and
__________________ Director ) John A. Ranson
___________________
___________________________________________________________________________
An executed copy of each of the related powers of attorney was filed with the
Securities and Exchange Commission in connection with the Registration
Statement on Form S-6 of The Kansas Tax-Exempt Trust, Series 51
(File No. 33-46376) and Series 52 (File No. 33-47687) and the same are
hereby incorporated herein by this reference.
S-2
