File No. 333-
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 7
B. Name of Depositor: RANSON & ASSOCIATES, INC.
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 & ASSOCIATES, INC.
Attention: John A. Ranson
120 South Market, Suite 450
Wichita, Kansas 67202
CHAPMAN AND CUTLER
Attention: Mark J. Kneedy
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 MUNICIPAL TRUST
MULTI-STATE SERIES 7
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 securities ) Prospectus Front Cover Page
by states ) Objectives of the Trusts
36.Suspension of sales of trust's ) *
securities )
37.Revocation of authority to ) *
distribute securities )
38. (a) Method of distribution )
(b) Underwriting agreements ) Public Offering Information
(c) Selling agreement )
39. (a) Organization of principal )
underwriter ) Sponsor Information
(b) N.A.S.D. membership by )
principal underwriter )
)
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Sponsor Information
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of the trust ) *
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Public Offering Information
) Purchased and Accrued Interest
) Redemption and Repurchase
) of Units
(b) Schedule as to offering ) *
price )
(c) Variation in offering ) Purchased and Accrued Interest
price to certain persons ) Public Offering Information
45. Suspension of redemption rights ) *
46. (a) Redemption valuation ) Estimated Current Return
) Purchased and Accrued Interest
) Public Offering Information
) Redemption and Repurchase
) of Units
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Sponsor Information
in underlying securities ) Redemption and Repurchase
) of Units
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of ) Trustee Information
trustee )
49. Fees and expenses of trustee ) Summary of Essential Financial
) Information
) Expenses of the Trusts
)
50. Trustee's lien ) Purchased and Accrued Interest
) Distribution of Interest and
) Principal
) Expenses of the Trusts
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's )
securities ) *
52. (a) Provisions of trust agreement ) Trustee Information
with respect to replacement or ) Description of Trust Portfolios-
elimination of portfolio securities ) Replacement Bonds
(b) Transactions involving )
elimination of underlying securities ) *
(c) Policy regarding substitution 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 May 10, 1996
THE RANSON MUNICIPAL TRUST, MULTI-STATE
1,000 Units Series 7 (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 6
THE NEBRASKA TAX-EXEMPT TRUST, SERIES 6
THE TRUST. The Ranson Municipal Trust, Multi-State Series 6 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 $2,500,000 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 20%
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 aggregate
offering price of the Bonds). After the initial public offering period, the
secondary market public offering price will be equal to the aggregate bid
price of the Bonds in the portfolio of the Trust divided by the number of
Units outstanding, plus a sales charge of 5.50% of the Public Offering Price
(5.820% of the aggregate bid price of the Bonds). If the Bonds in the Trust
were available for direct purchase by investors, the purchase price of the
Bonds would not include the sales charge included in the Public Offering
Price of the Units. In addition, on transactions entered into on and after
December 20, 1995, there will be added an amount equal to the accrued
interest from December 22, 1995 to the date of settlement (three business
days after order) less distributions from the Interest Account subsequent to
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 December 19, 1995.
RANSON CAPITAL CORPORATION
SPONSOR
December 22, 1995 (the "First Settlement Date"). If Units were available for
purchase at the opening of business on the Date of Deposit, the Public
Offering Price per Unit would have been $999.64. During the initial offering
period, the sales charge is reduced on a graduated scale for sales involving
at least 150 Units. See "Public Offering Information." The value of the
Bonds will fluctuate with market and credit conditions, including any changes
in interest rate levels.
THE UNITS. As of the Date of Deposit each Unit represents a fractional
undivided interest in the principal and net income of the Trust as set forth
under "Summary of Essential 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 February 1, 1996 to holders of record on
January 15, 1996, 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 6
THE NEBRASKA TAX-EXEMPT TRUST, SERIES 6
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
As of December 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 $ 2,500,000
Number of Units 2,595
Fractional Undivided Interest in Trust per Unit 1/2,595
Principal Amount (Par Value) of Bonds per Unit(1) $ 963.39
Aggregate Offering Price of Bonds in the Trust $ 2,466,945
Aggregate Offering Price of Bonds per Unit $ 950.65
Plus Sales Charge 4.90% (5.152% of the Aggregate
Offering Price of the Bonds) $ 48.99
Public Offering Price per Unit(2) $ 999.64
Redemption Price per Unit(3) $ 941.43
Sponsor's Initial Repurchase Price per Unit(3)(4) $ 950.65
Excess of Public Offering Price per Unit Over
Redemption Price per Unit $ 58.21
Excess of Public Offering Price per Unit Over
Sponsor's Initial Repurchase Price per Unit $ 48.99
Estimated Annual Interest Income per Unit $ 52.85
Less: Estimated Annual Expense per Unit $ 2.79
Estimated Annual Net Interest Income per Unit $ 50.07
Estimated Daily Rate of Net Interest Income Accrual per Unit $ .1391
Estimated Current Return(5)(6)(7) 5.01%
Estimated Long-Term Return(5)(6)(7) 5.08%
Initial Distribution(February 1, 1995) $3.20 per Unit
First Settlement Date December 22, 1995
Minimum Principal Distribution $1.00 per Unit
Mandatory Termination Date June 1, 2028
Minimum Principal Amount of Bonds of Trust Under Which
Indenture May Be Terminated $500,000
Distribution Dates First day of every month commencing February 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 (three business days after order) less distributions from
the Interest Account subsequent to the First Settlement Date. A person
will become the owner of Units on the date of settlement provided payment
has been received.
(3) Plus accrued interest to the settlement date in the case of sale or to
the date of tender in the case of redemption.
(4) The Sponsor intends to maintain a secondary market for Units at prices
based on the aggregate bid price of the Bonds in the Trust; however,
during the initial offering period such prices will be based on the
aggregate offering price of the Bonds.
(5) The Estimated Current Return and Estimated Long-Term Return are
increased for transactions entitled to a reduced sales charge (see
"Public Offering Information").
(6) The Estimated Current Return is calculated by dividing the estimated
net annual interest income per Unit by the Public Offering Price. The
estimated net annual interest income per Unit will vary with changes in
fees and expenses of the Trustee and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of Securities while
the Public Offering Price will vary with changes in the offering price of
the underlying Securities; therefore, there is no assurance that the
present Estimated Current Return indicated above will be realized in the
future. The Estimated Long-Term Return is calculated using a formula
which (1) takes into consideration, and determines and factors in the
relative weightings of, the market values, yields (which takes into
account the amortization of premiums and the accretion of discounts) and
estimated retirements of all of the Bonds in the Trust and (2) takes into
account a compounding factor and 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 6, which is comprised of
one unit investment trust, The Nebraska Tax-Exempt Trust, Series 6, 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 $2,500,000 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 2,595 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
5
the last Bond held in the Trust, but in no event shall it continue beyond the
end of the calendar year preceding the fiftieth anniversary of its execution.
Written notice of any termination specifying the time or times at which
Certificateholders may surrender their certificates for cancellation shall be
given by the Trustee to each Certificateholder at the address appearing on
the registration books of the Trust maintained by the Trustee. The Trustee
will begin to liquidate any Bonds held in the Trust within a reasonable
period of time from said notification and shall deduct from the proceeds any
accrued costs, expenses or indemnities provided by the Indenture, including
any compensation due the Trustee, any costs of liquidation and any amounts
required for payment of any applicable taxes, governmental charges or final
operating costs of the Trust.
The Trustee shall then distribute to Certificateholders their pro rata
shares of the remaining balances in the Principal and Interest Accounts 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 8 obligations of issuers located in the
State of Nebraska. Two of the issues in the Trust are general obligations of
the governmental entities issuing them or are backed by the taxing power
thereof representing 24% of principal amount of bonds in the Trust. 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: Health Care, 3 (31%); Electric
Utility, 1 (25%); Multi-Family Housing, 1 (16%) and Single-Family Housing, 1
(4%). The dollar weighted average maturity of the Bonds in the Trust is 23.4
years. Approximately 20% 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
7
of medicaid, State aid to schools, public assistance and special education.
The budget also allowed for a 3.0 percent budget reserve ($99.5 million) at
the end of the biennium.
The foregoing information constitutes only a brief summary of some of the
financial difficulties which may impact certain issuers of Bonds and does not
purport to be a complete or exhaustive description of all adverse conditions
to which the issuers in the 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 31% 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 25% 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.
8
Approximately 20% of the aggregate principal amount of the Bonds in the
Trust consists of obligations which derive their payment from mortgage loans.
No more than 25% of the Trust's total assets will be invested in mortgages
originated by the same financial institution. Certain of the Bonds in the
Trust may be single family mortgage revenue bonds issued for the purpose of
acquiring from originating financial institutions notes secured by mortgages
on residences located within the issuer's boundaries and owned by persons of
low or moderate income. In view of this, an investment in the Trust should
be made with an understanding of the characteristics of such issuers and the
risks which such an investment may entail. Mortgage loans are generally
partially or completely prepaid prior to their final maturities as a result
of events such as sale of the mortgaged premises, default, condemnation or
casualty loss. Because these bonds are subject to extraordinary mandatory
redemption in whole or in part from such prepayments on mortgage loans, a
substantial portion of such bonds will probably be redeemed prior to their
scheduled maturities or even prior to their ordinary call dates.
Extraordinary mandatory redemption without premium could also result from the
failure of the originating financial institutions to make mortgage loans in
sufficient amounts within a specified time period. Additionally, unusually
high rates of default on the underlying mortgage loans may reduce revenues
available for the payment of principal of or interest on such mortgage
revenue bonds. These bonds were issued under Section 103A of the Internal
Revenue Code, which Section contains certain requirements relating to the use
of the proceeds of such bonds in order for the interest on such bonds to
retain its tax-exempt status. In each case the issuer of the bonds has
covenanted to comply with applicable requirements and bond counsel to such
issuer has issued an opinion that the interest on the bonds is exempt from
Federal income tax under existing laws and regulations. Certain of the Bonds
in the Trust may be obligations of issuers whose revenues are primarily
derived from mortgage loans to housing projects for low to moderate income
families. The ability of such issuers to make debt service payments will be
affected by events and conditions affecting financed projects, including,
among other things, the achievement and maintenance of sufficient occupancy
levels and adequate rental income, increases in taxes, employment and income
conditions prevailing in local labor markets, utility costs and other
operating expenses, the managerial ability of project managers, changes in
laws and governmental regulations, the appropriation of subsidies and social
and economic trends affecting the localities in which the projects are
located. The occupancy of housing projects may be adversely affected by high
rent levels and income limitations imposed under Federal and state programs.
Certain issuers of housing bonds have considered various ways to redeem bonds
they have issued prior to the stated first redemption dates for such bonds.
In one situation an issuer, in reliance on its interpretation of certain
language in the indenture under which one of its bond issues was created,
redeemed all of such issue at par in spite of the fact that such indenture
provided that the first optional redemption was to include a premium over par
and could not occur prior to a later date. In connection with the housing
bonds held by the Trust, the Sponsor at the Date of Deposit is not aware that
any of the respective issuers of such Bonds are actively considering the
redemption of such Bonds prior to their respective stated initial call dates.
For a general discussion of the effects of Bond prepayments and redemptions
on Certificateholders who acquired Units at a time when such Bonds were
valued in excess of the principal amount or redemption price of such Bonds,
see "General" below.
REPLACEMENT BONDS. Because certain of the Bonds in the Trust may from time to
time under certain circumstances be sold or redeemed or will mature in
accordance with their terms and because the proceeds from such events will be
distributed to Certificateholders and will not be reinvested, no assurance
can be given that the Trust will retain for any length of time its present
size and composition. Neither the Sponsor nor the Trustee shall be liable in
any way for any default, failure or defect in any Bond. In the event of a
failure to deliver any Bond that has been purchased for the Trust under a
contract, including any Bonds purchased on a "delayed delivery" basis
("Failed Bonds"), the Sponsor is authorized under the Indenture to direct the
Trustee to acquire other bonds ("Replacement Bonds") to make up the original
corpus of the Trust.
9
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 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
10
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.
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
11
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 a compounding factor and
the expenses and sales charge associated with each Trust Unit. Since the
market values and estimated retirements of the Securities and the expenses of
the Trust will change, there is no assurance that the present Estimated Long-
Term Return will be realized in the future. Estimated Current Return and
Estimated Long-Term Return are expected to differ because the calculation of
Estimated Long-Term Return reflects the estimated date and amount of
principal returned while the Estimated Current Return calculation includes
only net annual interest income and Public Offering Price. Neither rate
reflects the true return to Certificateholders which is lower because neither
includes the effect of the delay in the first payment to Certificateholders.
In order to acquire certain of the Bonds contracted for by the Sponsor
for deposit in the Trust, it may be necessary for the Sponsor or Trustee to
pay on the settlement dates for delivery of such Bonds amounts covering
accrued interest on such Bonds which exceed 1) the amounts paid by
Certificateholders and 2) the amounts which will be made available through
cash furnished by the Sponsor on the Date of Deposit, which amount of cash
may exceed the interest which would accrue to the First Settlement Date. The
Trustee has agreed to pay any amounts necessary to cover any such excess and
will be reimbursed therefor, without interest, when funds become available
from interest payments on the particular Bonds with respect to which such
payments may have been made.
PUBLIC OFFERING INFORMATION
Units in the Trust are offered at the Public Offering Price which during
the initial public offering period is based on the offering prices of the
Bonds in the Trust plus a sales charge of 4.90% of the Public Offering Price
12
(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.
Although payment is normally made three business days following the order
for purchase, payment may be made prior thereto. A person will become the
owner of Units on the date of settlement provided payment has been received.
Cash, if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934.
During the initial offering period, Units will be distributed to the
public through the Underwriters and through certain dealers. Underwriters
will acquire Units from the Sponsor at the concessions set forth under
"Underwriting." Dealers will be allowed a concession during the initial
offering period equal to 3.25% of the Public Offering Price. In the secondary
market such concession will amount to 4.5% of the Public Offering Price.
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge paid by their
customers is retained by or remitted to the banks in an amount allowing a
concession equal to that shown above for dealers. Under the Glass-Steagall
Act, banks are prohibited from underwriting Trust Units; however, the Glass-
Steagall Act does permit certain agency transactions and the banking
regulators have indicated that these particular agency transactions are
permitted under such Act.
To facilitate the handling of transactions during the initial public
offering period, sales of Units shall normally be limited to transactions
involving a minimum of five Units. Further purchases may be made in multiples
of one Unit. The minimum purchase in the secondary market will be one Unit.
13
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.
Because of the varying interest payment dates of the Bonds, accrued
interest at any point in time will be greater than the amount of interest
actually received by the Trust and distributed to Certificateholders.
Therefore, there will always remain an item of accrued interest that is added
to the value of the Units. If a Certificateholder sells or redeems all or a
portion of his Units, he will be entitled to receive his proportionate share
of the accrued interest from the purchaser of his Units. Since the Trustee
has use of the funds held in the Interest Account for distributions to
Certificateholders and since such Account is non-interest-bearing to
Certificateholders, the Trustee benefits thereby.
REDEMPTION AND REPURCHASE OF UNITS
Certificateholders may redeem all or a portion of their Units by tender
to the Trustee, at its corporate office in Kansas City, Missouri, of the
certificates representing Units to be redeemed, duly endorsed or accompanied
by proper instruments of transfer with signature guaranteed. In order to
effect a redemption of Units, Certificateholders must tender their
certificates to the Trustee or provide satisfactory indemnity required in
connection with lost, stolen or destroyed certificates. No redemption fee
will be charged. On the third business day following such tender, the
Certificateholder will be entitled to receive in cash for each Unit tendered
an amount equal to the redemption price per Unit as next computed after
receipt by the Trustee of such tender of Units as determined by the bid price
of the Bonds in the Trust on the date of tender (the "Redemption Price") plus
accrued interest to, but not including, the date of redemption. The price
received upon redemption may be more or less than the amount paid by the
Certificateholder depending on the value of the Bonds on the date of tender.
The value of the Bonds will fluctuate with market and credit conditions,
including any changes in interest rate levels.
14
Accrued interest paid on redemption shall be withdrawn from the Interest
Account, or if the balance therein is insufficient, from the Principal
Account. All other amounts paid on redemption shall be withdrawn from the
Principal Account. In addition, the Trustee is empowered, with certain
recommendations allowed by the Sponsor, to sell Bonds in the portfolio of the
Trust to make funds available for redemption. Units redeemed shall be
cancelled and not be available for reissuance.
The recognized date of tender is deemed to be the date on which Units are
received in proper form by the Trustee prior to 3:00 p.m. Central time. Units
received by the Trustee after 3:00 p.m. will be deemed to have their
recognized date of tender on the next business day on which the New York
Stock Exchange is open for trading and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the Redemption Price
computed on that date (see "Evaluation of the Trust").
To the extent that Bonds in the portfolio of the Trust are sold to meet
redemptions, the size and diversity of the Trust will be reduced. Such sales
may occur at a time when Bonds might not otherwise be sold which may result
in lower prices received on the Bonds than might be realized under normal
trading conditions.
Under regulations issued by the Internal Revenue Service, the Trustee
will be required to withhold a specified percentage of the principal amount
of a Unit redemption if the Trustee has not been furnished the redeeming
Certificateholder's tax identification number in the manner required by such
regulations. Any amount so withheld is transmitted to the Internal Revenue
Service and may be recovered by the Certificateholder only when filing his or
her tax return. Under normal circumstances the Trustee obtains the
Certificateholder's tax identification number from the selling broker at the
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
15
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 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
16
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.
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. If the interest on a Bond should be determined to be
taxable, the Bond would generally have to be sold at a substantial discount.
In addition, investors could be required to pay income tax on interest
received prior to the date of which interest is determined to be taxable.
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. 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.
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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"); and
2) 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
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 tax
basis 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 would have previously accrued based on its issue price (it's
"adjusted issue price") to prior owners. The application of these rules will
also vary depending on the value of the Bond on the date a Certificateholder
acquires his Units and the price the Certificateholder pays for his Units.
Investors with questions regarding these Code sections should consult with
their tax advisers.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") subjects tax-
exempt bonds to the market discount rules of the Code effective for bonds
purchased after April 30, 1993. In general, market discount is the amount (if
any) by which the stated redemption price at maturity exceeds an Investor's
purchase price (except to the extent that such difference, if any, is
attributable to original issue discount not yet accrued), subject to a
statutory de minimis rule. Market discount can arise based on the price a
Trust pays for Bonds or the price a Certificateholder pays for his or her
Units. Under the Tax Act, accretion of market discount is taxable as ordinary
income; under prior law the accretion had been treated as capital gain.
Market discount that accretes while 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
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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.
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.
19
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 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;
20
(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;
(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
21
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
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
22
redemption, such authority has been delegated to the Evaluator which
determines the Redemption Price per Unit on a daily basis on days the New
York Stock Exchange is open (and on any other days on which Sponsor secondary
market transactions or redemptions occur). Each evaluation of the Trust has
been and will be determined on the basis of cash on hand in the Trust or
money in the process of being collected, the value of the Bonds in the
portfolio of the Trust based on the bid prices of the Bonds and interest
accrued thereon not subject to collection less any taxes or governmental
charges payable, any accrued expenses of the Trust and any cash held for
distribution to Certificateholders. The result of that computation is then
divided by the number of Units outstanding as of the date thereof to
determine the per Unit value of the Trust.
The Evaluator may determine the value of the Bonds in the portfolio of
the Trust 1) on the basis of current bid prices of the Bonds obtained from
dealers or brokers who customarily deal in bonds comparable to those held in
the Trust; 2) if bid prices are not available for any of the Bonds, on the
basis of bid prices for comparable bonds; 3) by causing the value of the
Bonds to be determined by others engaged in the practice of evaluating,
quoting or appraising comparable bonds; or 4) by any combination of the
above. Although the Unit value is based on the bid prices of the Bonds, the
Units are sold initially to the public at the Public Offering Price based on
the offering prices of the Bonds.
The initial or primary Public Offering Price of the Units and the
Sponsor's initial repurchase price per Unit are based on the offering price
per Unit of the underlying Bonds plus the applicable sales charge and 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 1.0% 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
23
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.
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 - 78 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 November 30, 1995, the total unaudited
stockholders' equity of Ranson Capital Corporation was $772,154. (This
paragraph relates only to the Sponsor and not to any Series of The Ranson
24
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.)
Commencing January 1, 1996, Ranson & Associates, Inc. will assume the
responsibilities of Sponsor for the Trust and all outstanding series of The
Kansas Tax-Exempt Trust and The Nebraska Tax-Exempt Trust.
Dealers will purchase the Units from the Sponsor on the Date of Deposit
at a price equal to the Public Offering Price per Unit less that percentage
indicated under "Public Offering Information." Any reduced sales charge for
quantity purchases as described under "Public Offering Information" will be
the responsibility of the dealer. In addition to that portion of the sales
commission retained by the Sponsor, the Sponsor will realize a profit or
sustain a loss, as the case may be, as a result of the difference between the
price paid for the Bonds by the Sponsor and the cost of such Bonds to the
Trust (which is based on the aggregate offering price of the Bonds in the
portfolio of the Trust on the Date of Deposit as determined by Stern Brothers
& Co.). See "Trust Portfolio." The Sponsor may also realize profits or
sustain losses with respect to Bonds deposited in the Trust which were
acquired by the Sponsor from underwriting syndicates of which it was a
member. The Sponsor has participated as sole underwriter or as manager or as
a member of the underwriting syndicate from which 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.
25
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Bonds for the Trust portfolio. The Trustee is
empowered to sell, for the purpose of redeeming Units tendered by any
Certificateholder and for the payment of expenses for which funds may not be
available, such of the Bonds as are designated by the Sponsor as the Trustee
in its sole discretion may deem necessary. The Sponsor is empowered, but not
obligated, to direct the Trustee to dispose of Bonds upon default in payment
of principal or interest, institution of certain legal proceedings, default
under other documents adversely affecting debt service, default in payment of
principal or interest on other obligations of the same issuer, decline in
projected income pledged for debt service on revenue bonds or decline in
price or the occurrence of other market or credit factors, including advance
refunding (i.e., the issuance of refunding securities and the deposit of the
proceeds thereof in trust or escrow to retire the refunded securities on
their respective redemption dates), so that in the opinion of the Sponsor the
retention of such Bonds would be detrimental to the interest of the
Certificateholders. The Sponsor is required to instruct the Trustee to reject
any offer made by an issuer of any of the Bonds to issue new obligations in
exchange or substitution for any Bond pursuant to a refunding or refinancing
plan, except that the Sponsor may instruct the Trustee to accept or reject
such an offer or to take any other action with respect thereto as the Sponsor
may deem proper if (1) the issuer is in default with respect to such Bond or
(2) in the written opinion of the Sponsor the issuer will probably default
with respect to such Bond in the reasonably foreseeable future. Any
obligation so received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Indenture to the same
extent as Bonds originally deposited thereunder. Within five days after the
deposit of obligations in exchange or substitution for underlying Bonds, the
Trustee is required to give notice thereof to each Certificateholder,
identifying the Bonds eliminated and the Bonds substituted therefor. Except
as stated herein and under "Description of Trust Portfolio" regarding the
substitution of Replacement Bonds for Failed Bonds, the acquisition by the
Trust of any securities other than the Bonds initially deposited is not
permitted.
If any default in the payment of principal or interest on any Bond occurs
and no provision for payment is made therefor within 30 days, the Trustee is
required to notify the Sponsor thereof. If the Sponsor fails to instruct the
Trustee to sell or to hold such Bond within 30 days after notification by the
Trustee to the Sponsor of such default, the Trustee may in its discretion
sell the defaulted Bond and not be liable for any depreciation or loss
thereby incurred.
In accordance with the Indenture, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the certificates issued by
the Trust to, every Certificateholder of the Trust. Such books and records
shall be open to inspection by any Certificateholder at all reasonable times
during the usual business hours. The Trustee shall make such annual or other
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,
26
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Indenture at any time or without cause.
Notice of such removal and appointment shall be mailed to each
Certificateholder by the Sponsor. Upon execution of a written acceptance of
such appointment by such successor trustee, all the rights, powers, duties
and obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which a Trustee shall be a party, shall be the successor
trustee. The Trustee must be a corporation organized under the laws of the
United States, or any state thereof, be authorized under such laws to
exercise trust powers and have at all times an aggregate capital, surplus and
undivided profits of not less than $5,000,000.
UNDERWRITING
<TABLE>
The Underwriters named below have severally purchased Units in the
following respective amounts from the Sponsor.
<CAPTION>
NAME ADDRESS UNITS
<S> <C> <C>
Ranson Capital Corporation 120 S. Market, Suite 450 1,595
Wichita, Kansas 67202
Edward D. Jones & Co. 201 Progress Parkway 1,000
Maryland Heights, Missouri 63043
</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
27
whole or in part, any order for the purchase of Units and the right to change
the amount of the concession from time to time. Underwriters will acquire
Units from the Sponsor based on the amount of Units underwritten. The
concessions from the Public Offering Price will be as set forth in the
following table:
<TABLE>
<CAPTION>
100-249 250-499 Units 500-999 Units 1,000 or More Units
Underwritten Underwritten Underwritten Underwritten
<C> <C> <C> <C>
3.50% 3.60% 3.80% 4.00%
</TABLE>
In addition, the Sponsor has agreed to provide Underwriters with an
additional concession of $2.50 per Unit for committing to underwrite a total
of 1,000 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 December 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;
28
3) Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangements under the
laws of bankruptcy and other laws affecting creditors' rights.
AAA-This is the highest rating assigned by Standard & Poor's to a debt
obligation. Capacity to pay interest and repay principal is extremely strong.
AA-Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A-Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher
rated categories.
BBB-Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated
categories.
Plus (+) or Minus (-): The ratings from "AA" to "BBB" may be modified by
the addition of a plus or minus sign to show relative standing within the
major rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the issuance of the bonds being rated and indicates
that payment of debt service requirements is largely or entirely dependent
upon the 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
29
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than
in Aaa securities. Their market value is virtually immune to all but money
market influences, with the occasional exception of oversupply in few
specific instances.
A-Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future. The market value of A-rated bonds may be influenced to some degree by
economic performance during a sustained period of depressed business
conditions, but, during periods of normalcy, A-rated bonds frequently move in
parallel with Aaa and Aa obligations, with the occasional exception of
oversupply in a few specific instances.
Baa-Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected or poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment characteristics
and in fact have speculative characteristics as well. The market value of
Baa-rated bonds is more sensitive to changes in economic circumstances, and
aside from
occasional speculative factors applying to some bonds of this class, Baa
market valuations move in parallel with Aaa, Aa and A obligations during
periods of economic normalcy, except in instances of oversupply.
Moody's bond rating symbols may contain numerical modifiers of a generic
rating classification. The modifier 1 indicates that the bond ranks at the
high end of its category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
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 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
30
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 6 (THE NEBRASKA TAX-EXEMPT TRUST, SERIES 6):
We have audited the accompanying statement of net assets, including the
Trust portfolio, of The Ranson Municipal Trust, Multi-State Series 6 (The
Nebraska Tax-Exempt Trust, Series 6), as of the opening of business on
December 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 December 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 6 (The Nebraska Tax-Exempt Trust, Series
6) at the opening of business on December 19, 1995, in conformity with
generally accepted accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
December 19, 1995
<TABLE>
THE RANSON MUNICIPAL TRUST
<CAPTION>
MULTI-STATE SERIES 6 (THE NEBRASKA TAX-EXEMPT TRUST, SERIES 6)
STATEMENT OF NET ASSETS
AT THE OPENING OF BUSINESS ON DECEMBER 19, 1995, THE DATE OF DEPOSIT
<S> <C>
TRUST PROPERTY
Investment in securities-
Bonds deposited in Trust (1) $ 2,466,945
Accrued interest to Date of Deposit on Bonds (2) 25,640
____________
2,492,585
Less distributions payable (2) 25,640
____________
Net assets, applicable to 2,595 outstanding Units of
fractional undivided interest $ 2,466,945
INTEREST OF CERTIFICATEHOLDERS
Cost to investors (3) $ 2,594,053
Less sales charge (3) 127,108
____________
Net proceeds to the Trust, equal to net assets $ 2,466,945
</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 $26,783 representing the accrued interest to December 22, 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 6
TRUST PORTFOLIO AT THE OPENING OF BUSINESS ON DECEMBER 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(6) CONTRACTS TO PURCHASE BONDS(1)(5) RATINGS(2) PROVISION(3) TO TRUST(4)
_________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
$*%% 300,000 City of Omaha, Nebraska General Obligation AAA** 2005 @ 102 $ 290,004
Refunding Bonds, Series 1995, 5.00% Due 2007 @ 100
12/1/2012
*%% 300,000 City of Omaha, Nebraska General Obligation AAA** 2005 @ 102 289,650
Refunding Bonds, Series 1995, 5.00%, Due 2007 @ 100
12/1/2013
@@%% 100,000 Hospital Authority No. 2 of Douglas County, Nebraska AAA 2005 @ 102 100,000
Health Facilities Revenue Bonds (Catholic Health 2007 @ 100
Corporation) Series 1995C (MBIA Insured) 5.375%
Due 11/15/2015
@@ 625,000 Nebraska Public Power District Power Supply System AAA 2003 @ 102 597,563
Revenue Bonds, 1993 Series (MBIA Insured) 5.00% 2005 @ 100
Due 1/1/2017
## 100,000 Nebraska Investment Finance Authority Single Family AAA 2005 @ 101.50 100,000
Housing Revenue Bonds, 1995 Series A, 6.50%, Due 2007 @ 100
9/1/2015
@@%% 500,000 Hospital Authority No. 2 of Douglas County, Nebraska AAA 2005 @ 102 500,000
Health Facilities Revenue Bonds (Catholic Health 2007 @ 100
Corporation) Series 1995C (MBIA Insured) 5.50%
Due 11/15/2021
175,000 Hospital Authority No. 1 of Lancaster County, AAA 2002 @ 102 189,728
Nebraska Hospital Revenue Bonds (Bryan Memorial 2004 @ 100
Project) Series 1992 (MBIA Insured) 6.70%
Due 6/1/2022
## 400,000 Nebraska Investment Finance Authority Multi-Family AAA 2005 @ 102 400,000
Housing Revenue Bonds, 1995 Series A (FNMA 2007 @ 100
Collateralized) 6.20%, Due 6/1/2028
___________ ___________
$2,500,000 $2,466,945
</TABLE>
[FN]
See "Notes to Trust Portfolio."
33
NOTES TO TRUST PORTFOLIO:
(1) Contracts to acquire Bonds were entered into by the Sponsor during the
period October 19, 1995 through December 18, 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>
$2,435,452 $31,493 $137,150 $2,443,000
</TABLE>
34
(6) Approximately 20% 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.
ESTIMATED CASH FLOWS TO CERTIFICATEHOLDERS
The table below sets forth the per Unit estimated monthly distribution of
interest and principal 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>
SERIES 6
<CAPTION>
Estimated Estimated Estimated
Distribution Dates Interest Principal Total
(Each Month) Distribution Distribution Distribution
__________________ ____________ ____________ ____________
<S> <C> <C> <C>
February 1996 $3.20 $ 0.00 $ 3.20
March 1996 - May 2002 4.17 0.00 4.17
June 2002 4.17 68.79 72.96
July 2002 - November 2012 3.81 0.00 3.81
December 2012 3.81 115.61 119.42
January 2013 - November 2013 3.35 0.00 3.35
December 2013 3.35 115.61 118.96
January 2014 - December 2015 2.89 0.00 2.89
January 2016 2.89 38.54 41.43
February 2016 - December 2016 2.72 0.00 2.72
January 2017 2.72 240.85 243.57
February 2017 - August 2018 1.76 0.00 1.76
September 2018 1.76 38.54 40.30
October 2018 - December 2020 1.56 0.00 1.56
January 2021 1.56 192.68 194.24
February 2021 - May 2028 0.67 0.00 0.67
June 2028 0.67 154.14 154.81
</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 12
Public Offering Information 12
Accrued Interest 14
Redemption and Repurchase of Units 14
Distribution of Interest and Principal 16
Distribution Reinvestment Option 17
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 36
</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 & Associates, Inc., as Depositor, and
Investors Fiduciary Trust Company, as Trustee (to be supplied by
amendment).
3.1 Opinion and consent of Chapman and Cutler, special counsel to the
Depositor, as to legality of securities being registered (to be
supplied by amendment).
3.2 Opinion of Chapman and Cutler, special counsel to the Depositor, as to
Federal 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 7 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
10th day of May, 1996.
THE RANSON MUNICIPAL TRUST, MULTI-STATE SERIES 7
(Registrant)
By RANSON & ASSOCIATES, INC.
(Depositor)
Attest John A. Ranson
______________________
President and Director
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 May 10, 1996.
Signature Title )
/s/ John A. Ranson President and Director
______________________
/s/ Alex R. Meitzner Chief Executive Officer
______________________ and Director
/s/ Robin K. Pinkerton Secretary, Treasuer and
______________________ Director ) /s/ 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
