AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1998
REGISTRATION NO. 333-_____
CIK #910942
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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REGISTRATION STATEMENT
ON
FORM S-6
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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: Ranson Unit Investment Trusts, Series 74
B. NAME OF DEPOSITOR: Ranson & Associates, Inc.
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
Ranson & Associates, Inc.
250 North Rock Road, Suite 150
Wichita, Kansas 37206
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
Copy to:
Alex R. Meitzner MARK J. KNEEDY
Ranson & Associates, Inc. c/o Chapman and Cutler
250 North Rock Road, Suite 150 111 West Monroe Street
Wichita, Kansas 67206 Chicago, Illinois 60603
E. TITLE OF SECURITIES BEING REGISTERED: Units of beneficial interest
F. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date
of the Registration Statement.
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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 information in this prospectus is not complete and may be changed. No
person may sell Units of the Trust until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an
offer to sell Units and is not soliciting an offer to buy Units in any state
where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS DATED DECEMBER 18, 1998
SUBJECT TO COMPLETION
RANSON UNIT INVESTMENT TRUSTS, SERIES 74
VALUE LINE #1 STRATEGY TRUST, SERIES 1 (JANUARY 1999 SERIES)
Value Line #1 Strategy Trust, Series 1 (January 1999 Series) seeks an above-
average total return by increasing the value of your investment. The Trust
invests in a portfolio of the 100 stocks ranked #1 for timeliness by The Value
Line Investment Survey. Of course, we cannot guarantee that the Trust will
achieve its objective.
Units are not deposits or obligations of any bank
or government agency and are not guaranteed.
You should read this prospectus and retain it for future reference.
January 14, 1999
The Securities and Exchange Commission has not approved
or disapproved of the Units or passed upon the adequacy of this prospectus.
Any contrary representation is a criminal offense.
RANSON UNIT INVESTMENT TRUSTS, SERIES 74
ESSENTIAL INFORMATION
AS OF JANUARY 13, 1999*
SPONSOR, SUPERVISOR AND EVALUATOR: RANSON & ASSOCIATES, INC.
TRUSTEE: THE BANK OF NEW YORK
Cusip (Cash) ___________
Cusip (Reinvest) ___________
Number of Units (1) ___________
Fractional Undivided Interest Per Unit(1) ___________
Public Offering Price:
Aggregate Value of Securities in Portfolio (2) $___________
Aggregate Value of Securities per Unit $ 9.90
Plus total sales charge (3) $ 0.29
Less deferred sales charge per Unit $ 0.19
Public Offering Price Per Unit (4) $ 10.00
Redemption Price Per Unit (5) $___________
Sponsor's Initial Repurchase Price Per Unit (5) $___________
Excess of Public Offering Price Per Unit over Redemption Price Per Unit and
Sponsor's Initial Repurchase Price Per Unit $___________
Calculation of Estimated Net Annual Dividends Per Unit: (6) ___________
Estimated Gross Annual Dividends per Unit $___________
Less: Estimated Annual Operating Expense per Unit $___________
Estimated Net Annual Dividends per Unit $___________
Estimated Organizational Expenses per Unit (2) $___________
Minimum Value of Trust under which Trust Agreement
may be Terminated 40% of aggregate value of Securities at deposit
Rollover Date March 14, 2000
Mandatory Termination Date March 14, 2000
Evaluator's Annual Evaluation Fee Maximum of $0.0025 per Unit
Supervisor's Annual Supervisory Fee Maximum of $0.0035 per Unit
Trustee's Annual Fee $______ per Unit
Record and Computation Dates July 1 and December 15
Distribution Dates July 15 and December 31
Evaluations for purposes of sale, purchase or redemption of Units are made as of
3:15 p.m. Central Time next following receipt of an order for a sale or purchase
of Units or receipt by the Trustee of Units tendered for redemption.
* The business day prior to the Initial Date of Deposit
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(1) As of the close of business on the Initial Date of Deposit, the number
of Units of the Trust may be adjusted so that the aggregate value of
Securities per Unit will equal approximately $10. Therefore, to the extent
of any such adjustment the fractional undivided interest per Unit will
increase or decrease accordingly from the amounts indicated above.
2
(2) Each Security is valued at the closing sale price on the New York Stock
Exchange. Unitholders will bear all or a portion of the expenses incurred
in organizing and offering a Trust. The Public Offering Price includes the
estimated amount of these costs. The Trustee will deduct these expenses
from the Trust at the end of the initial offering period (approximately two
months).
(3) The total sales charge consists of an initial sales charge and a
deferred sales charge. The initial sales charge is equal to the difference
between the total sales charge and the deferred sales charge. The total
sales charge is 2.90% (equivalent to 2.987% of the net amount invested).
The deferred sales charge is equal to $0.19 per Unit.
(4) On the Initial Date of Deposit there will be no accumulated dividends in
the Income Account. Anyone ordering Units after such date will pay his pro
rata share of any accumulated dividends in such Income Account.
(5) The redemption price and secondary market repurchase price include the
estimated organizational costs. These costs are set forth in the "Fee
Table". The redemption price and secondary market repurchase price will
not include these costs after the initial offering period.
(6) The estimated annual dividends per Unit is based primarily on the most
recent dividend declarations. The actual net annual dividends per Unit
may be greater than or less than the amount shown depending on the actual
dividends collected and expenses incurred by the applicable Trust.
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FEE TABLE
This Fee Table is intended to assist investors in understanding the costs and
expenses that an investor in a Trust will bear directly or indirectly. See
"Public Offering of Units" and "Expenses of the Trust." Although the Trust is a
unit investment trust rather than a mutual fund and may have a term of less than
the periods indicated, this information is presented to permit a comparison of
fees.
Amount Per
Unit
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UNITHOLDER TRANSACTION EXPENSES (AS OF THE INITIAL DATE OF DEPOSIT)
(AS A PERCENTAGE OF OFFERING PRICE)
Initial Sales Charge (1) 1.00% $0.10(1)
Deferred Sales Charge (2) 1.90% 0.19
----- -----
Total Sales Charge 2.90%(4) $0.29
ESTIMATED ORGANIZATIONAL EXPENSE PER UNIT
ESTIMATED ANNUAL OPERATING EXPENSES (AS OF THE INITIAL DATE OF DEPOSIT)
(AS A PERCENTAGE OF NET ASSETS)
Trustee's Fee ____% $___
Portfolio Evaluation Fees ____% 0.0025
Portfolio Surveillance Fees ____% 0.0035
Other Operating Expenses %
----- -----
Total %
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EXAMPLE
Cumulative Expenses Paid for Period of:
-------------------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
An investor would pay the following expenses on a $1,000 investment
assuming the applicable sales charges and an initial estimated operating
expense ratio of ____% on the Trust, a 5% annual return and redemption
at the end of each time period $___ $___ $___ $___
The examples utilize a 5% annual rate of return as mandated by Securities and
Exchange Commission regulations applicable to mutual funds. The example should
not be considered a representation of past or future expenses or annual rate of
return; the actual expenses and annual rate of return may be more or less than
those assumed for purposes of the example.
(1) The Initial Sales Charge is equal to the difference between the Total
Sales Charge and the Deferred Sales Charge.
(2) The actual Deferred Sales Charge for this Trust is $0.19 per Unit,
irrespective of purchase or redemption price deducted on a monthly basis
commencing March 14, 1999 through August 14, 1999. If the Unit price
exceeds $10.00 per Unit, the Deferred Sales Charge will be less than
the percentage set forth above. If the Unit price is less than $10.00
per Unit, the Deferred Sales Charge will exceed the percentage set
forth above. Units purchased subsequent to the initial deferred sales
charge payment will be subject to the remaining deferred sales charge
payments.
4
THE FUND
Value Line #1 Strategy Trust, Series 1 is an underlying unit investment trust
included in Ranson Unit Investment Trusts, Series 74, which was created under
the laws of the State of New York pursuant to a trust indenture (the "Trust
Agreement") dated the date of this Prospectus (the "Initial Date of Deposit")
between Ranson & Associates, Inc. (the "Sponsor") and The Bank of New York (the
"Trustee").
Value Line #1 Strategy Trust, Series 1 consists of a portfolio of the 100 stocks
ranked #1 for timeliness by The Value Line Investment Survey as of the close of
business on the day prior to the Initial Date of Deposit. As used herein, the
term "Securities" means the common stocks (including contracts for the purchase
thereof) initially deposited in the Trust and described in the portfolio and any
additional common stocks acquired and held by the Trust pursuant to the
provisions of the Trust Agreement.
On the Initial Date of Deposit, the Sponsor delivered to the Trustee Securities
or contracts for the purchase thereof for deposit in the Trust. Subsequent to
the Initial Date of Deposit, the Sponsor may deposit additional Securities or
contracts to purchase additional Securities along with cash (or a bank letter of
credit in lieu of cash) to pay for such contracted Securities or cash (including
a letter of credit) with instructions to purchase additional Securities. Such
additional deposits will be in amounts which will maintain, for the first 90
days, as closely as possible the same original percentage relationship among the
number of shares of each Security in the related Trust established by the
initial deposit of Securities and, thereafter, the same percentage relationship
that existed on such 90th day. Although additional Units will be issued, each
Unit will continue to represent approximately the same number of shares of each
Security and the percentage relationship among the shares of each Security in
the Trust will remain the same. The required percentage relationship among the
Securities in the Trust will be adjusted to reflect the occurrence of a stock
dividend, a stock split or a similar event which affects the capital structure
of the issuer of a Security in the Trust but which does not affect the Trust's
percentage ownership of the common stock equity of such issuer at the time of
such event. If the Sponsor deposits cash, existing and new investors may
experience a dilution of their investments and a reduction in their anticipated
income because of fluctuations in the prices of the Securities between the time
of the cash deposit and the purchase of the Securities and because the Trust
will pay the associated brokerage fees. To minimize this effect, the Trust will
attempt to purchase the Securities as close to the evaluation time or as close
to the evaluation prices as possible.
The Trust consists of (a) the Securities listed under the "Portfolio" as may
continue to be held from time to time in the Trust, (b) any additional
Securities acquired and held by the Trust pursuant to the provisions of the
Trust Agreement and (c) any cash held in the Income and Capital Accounts.
Neither the Sponsor nor the Trustee shall be liable in any way for any failure
in any of the Securities. However, should any contract for the purchase of any
of the Securities initially deposited hereunder fail, the Sponsor will, unless
substantially all of the moneys held in the Trust to cover such purchase are
reinvested in substitute Securities in accordance with the Trust Agreement,
refund the cash and sales charge attributable to such failed contract to all
Unitholders on the next distribution date.
On the Initial Date of Deposit, the Sponsor delivered to the Trustee Securities
or contracts for the purchase thereof for deposit in the Trust. For the
Securities so deposited, the Trustee delivered to the Sponsor documentation
evidencing the ownership of that number of Units of the Trust set forth under
"Essential Information."
5
THE TRUST PORTFOLIO
The Trust seeks to provide capital appreciation by investing in the 100 stocks
ranked #1 for timeliness by The Value Line Investment Survey on the day before
the Initial Date of Deposit. The Value Line Investment Survey was created in
1931. The Value Line ranking system has been operating essentially in its
present form since 1965. It is backed by disciplined, objective, quantitative
analytical methodologies that have proven themselves over the last 60 years.
The Value Line TimelinessTM Rank measures potential price performance during the
next six to twelve months relative to 1700 stocks covered by The Value Line
Investment Survey. These 1700 stocks represent 95 industries and approximately
94% of the trading volume on all United States stock exchanges.
The Value Line TimelinessTM Rank uses a ranking scale of 1 (Highest) to 5
(Lowest). The components of the ranking system are the long-term trend of
earnings, prices, recent earnings and price momentum and earnings surprises. A
computer program combines these elements into a forecast of relative price
behavior of each stock for the six to twelve months ahead relative to all other
1700 stocks in the coverage universe. The Value Line Investment Survey
describes its ranking system as follows:
RANK 1 (HIGHEST): Value Line anticipates this stock to be one of the
best relative price performers during the next six to twelve months
(100 stocks).
RANK 2 (ABOVE AVERAGE): Value Line anticipates better-than-average
price performance (300 stocks).
RANK 3 (AVERAGE): Value Line anticipates price performance in line
with the market (900 stocks).
RANK 4 (BELOW AVERAGE): Value Line anticipates below-average price
performance (300 stocks).
RANK 5 (LOWEST): Value Line anticipates the poorest relative price
performance (100 stocks).
Value Line may change the timeliness rank from time to time based on new
earnings reports, changes in the price movement of a stock relative to the
market, a combination of the earnings and price factors, or shifts in the
relative positions of other stocks. The Trust portfolio will not change as a
result of any change in timeliness rank during the Trust's life. The portfolio
will remain fixed until termination except as otherwise described in this
prospectus and as provided in the Trust Agreement.
The timeliness rank is the opinion of The Value Line Investment Survey. It is
not the opinion of the Sponsor. The rank cannot predict future performance and
does not guarantee future performance. The value of Units will fluctuate and
may fall below the price you paid for your Units.
In each year since 1965, stocks ranked 1 or 2 for timeliness as a group have
outperformed stocks in groups 3, 4 and 5 combined. The chart below shows the
hypothetical results of the performance rankings by the five timeliness groups
without making changes throughout the year.
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RECORD OF VALUE LINE RANKINGS FOR TIMELINESS
(WITHOUT ALLOWING FOR CHANGES IN RANK)
YEAR RETURN
---- ------
1965 33.6%
1966 -3.1
1967 39.2
1968 31.2
1969 -17.7
1970 -8.9
1971 26.5
1972 10.1
1973 -17.1
1974 -23.1
1975 51.6
1976 35.3
1977 15.8
1978 19.8
1979 25.6
1980 50.2
1981 -1.9
1982 33.7
1983 25.2
1984 -8.6
1985 38.6
1986 23.5
1987 -1.2
1988 16.0
1989 28.7
1990 -6.6
1991 56.7
1992 10.1
1993 18.5
1994 4.6
1995 31.3
1996 27.0
1997 12.9
The chart above represents the hypothetical past performance of the Value Line
#1 ranking for timeliness group (but not the Trust) and should not be considered
indicative of future results. Further, these results are hypothetical. The
chart assumes that all dividends during a year are reinvested at the end of that
year and do not reflect sales charges, commissions, expenses or taxes. There
can be no assurance that the Trust will perform in a similar manner over its
life or over consecutive rollover periods, if available.
7
The hypothetical returns shown above are not guarantees of future performance
and should not be used as a predictor of returns to be expected in connection
with the Trust portfolio. It is important to note that the returns shown above
are based on the Value Line #1 ranking for timeliness group for each of the
periods involved; however, because the Trust has a term of approximately
fourteen months, the portfolio of the Trust will not be adjusted each year to
reflect the then current stocks ranked #1 for timeliness by The Value Line
Investment Survey. Both stock prices (which may appreciate or depreciate) and
dividends (which may be increased, reduced or eliminated) will affect the
returns. A Unitholder in the Trust would not necessarily realize as high a
total return on an investment in the stocks upon which the returns shown above
are based for the following reasons among others: the total return figures do
not reflect sales charges, commissions, Trust expenses or taxes; the Trust is
established at different times of the year; past performance is not indicative
of future results; and Securities are often purchased or sold at prices
different from the closing prices used in buying and selling Units.
Information contained in this Prospectus, as further updated, may also be
included from time to time in other prospectuses or in advertising material.
Information on the performance of the Trust strategy may be included from time
to time in other prospectuses or advertising material and may reflect sales
charges and expenses of the Trust. The performance of the Trust may also be
compared to the performance of money managers as reported in SEI Fund Evaluation
Survey (the leading data base of tax-exempt assets consisting of over 4,000
portfolios with total assets of $250 billion) or of mutual funds as reported by
Lipper Analytical Services Inc. (which calculates total return using actual
dividends on ex-dates accumulated for the quarter and reinvested at quarter
end), Money Magazine Fund Watch (which rates fund performance over a specified
time period after sales charge and assuming all dividends reinvested) or
Wiesenberger Investment Companies Service (which states fund performance
annually on a total return basis) or of the New York Stock Exchange Composite
Index, the American Stock Exchange Index (unmanaged indices of stocks traded on
the New York and American Stock Exchanges, respectively), the Dow Jones
Industrial Average (an index of 30 widely traded industrial common stocks) or
the Standard & Poor's 500 Index (an unmanaged diversified index of 500 stocks)
or similar measurement standards during the same period of time.
RISK FACTORS
The Trust may be appropriate investment vehicles for investors who desire to
participate in a portfolio of equity securities with greater diversification
than they might be able to acquire individually. An investment in Units of the
Trust should be made with an understanding of the risks inherent in an
investment in equity securities, including the risk that the financial condition
of issuers of the Securities may become impaired or that the general condition
of the stock market may worsen (both of which may contribute directly to a
decrease in the value of the Securities and, thus, in the value of the Units) or
the risk that holders of common stock have a right to receive payments from the
issuers of those stocks that is generally inferior to that of creditors of, or
holders of debt obligations issued by, the issuers and that the rights of
holders of common stock generally rank inferior to the rights of holders of
preferred stock. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases in value as market
confidence in and perceptions of the issuers change. These perceptions are
based on unpredictable factors including expectations regarding government,
economic, monetary and fiscal policies, inflation and interest rates, economic
expansion or contraction, and global or regional political, economic or banking
crises.
8
Holders of common stock incur more risk than the holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of, debt obligations or preferred stock
issued by the issuer. Holders of common stock of the type held by the portfolio
have a right to receive dividends only when and if, and in the amounts, declared
by the issuer's board of directors and to participate in amounts available for
distribution by the issuer only after all other claims on the issuer have been
paid or provided for. By contrast, holders of preferred stock have the right to
receive dividends at a fixed rate when and as declared by the issuer's board of
directors, normally on a cumulative basis, but do not participate in other
amounts available for distribution by the issuing corporation. Cumulative
preferred stock dividends must be paid before common stock dividends and any
cumulative preferred stock dividend omitted is added to future dividends payable
to the holders of cumulative preferred stock. Preferred stocks are also
entitled to rights on liquidation which are senior to those of common stocks.
Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of capital debt securities. Indeed, the issuance of debt securities
or even preferred stock will create prior claims for payment of principal,
interest, liquidation preferences and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its common
stock or the rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. Further, unlike debt securities which
typically have a stated principal amount payable at maturity (whose value,
however, will be subject to market fluctuations prior thereto), common stocks
have neither a fixed principal amount nor a maturity and have values which are
subject to market fluctuations for as long as the stocks remain outstanding.
The value of the Securities in the portfolio thus may be expected to fluctuate
over the entire life of the Trust to values higher or lower than those
prevailing on the Initial Date of Deposit.
Whether or not the Securities are listed on a national security exchange, the
principal trading market for the Securities may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the
Securities may depend on whether dealers will make a market in the Securities.
There can be no assurance that a market will be made for any of the Securities,
that any market for the Securities will be maintained or of the liquidity of the
Securities in any markets made. In addition, a Trust is restricted under the
Investment Company Act of 1940 from selling Securities to the Sponsor. The
price at which the Securities may be sold to meet redemptions and the value of a
Trust will be adversely affected if trading markets for the Securities are
limited or absent.
The Trust Agreement authorizes the Sponsor to increase the size of the Trust and
the number of Units thereof by the deposit of additional Securities, or cash
(including a letter of credit) with instructions to purchase additional
Securities, in the Trust and the issuance of a corresponding number of
additional Units. If the Sponsor deposits cash, existing and new investors may
experience a dilution of their investments and a reduction in their anticipated
income because of fluctuations in the prices of the Securities between the time
of the cash deposit and the purchase of the Securities and because the Trust
will pay the associated brokerage fees. To minimize this effect, the Trust will
attempt to purchase the Securities as close to the evaluation time or as close
to the evaluation prices as possible.
From time to time Congress considers proposals to reduce the rate of the
dividends-received deduction. Enactment into law of a proposal to reduce the
rate would adversely affect the after-tax return to investors who can take
advantage of the deduction. Unitholders are urged to consult their own tax
advisers. Further, at any time after the Initial Date of Deposit, litigation
may be initiated on a variety of grounds, or legislation may be enacted with
respect to the Securities in the Trust or the issuers of the Securities. There
can be no assurance
9
that future litigation or legislation will not have a material adverse effect on
a Trust or will not impair the ability of issuers to achieve their business
goals.
Like other investment companies, financial and business organizations and
individuals around the world, the Trust could be adversely affected if the
computer systems used by the Sponsor, Evaluator or Trustee or other service
providers to the Trust do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known as
the "Year 2000 Problem." The Sponsor, Evaluator and Trustee are taking steps
that they believe are reasonably designed to address the Year 2000 Problem with
respect to computer systems that they use and to obtain reasonable assurances
that comparable steps are being taken by the Trust's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Trust.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of Securities contained in the Trust, to varying degrees based upon
various factors, including, but not limited to, their industry sector and degree
of technological sophistication. The Sponsor is unable to predict what impact,
if any, the Year 2000 Problem will have on issuers of the Securities contained
in the Trust.
FEDERAL TAX STATUS
General. The following is a general discussion of certain of the Federal income
tax consequences of the purchase, ownership and disposition of the Units of the
Trust. The summary is limited to investors who hold the Units as capital assets
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986 (the "Code"). Unitholders should consult
their tax advisers in determining the Federal, state, local and any other tax
consequences of the purchase, ownership and disposition of Units in the Trust.
For purposes of the following discussion and opinion, it is assumed that each
Security is equity for Federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for
Federal income tax purposes; each Unitholder will be treated as the owner of
a pro rata portion of each of the assets of the Trust under the Code; and the
income of a Trust will be treated as income of the Unitholders thereof under
the Code. Each Unitholder will be considered to have received his pro rata
share of income derived from the Trust asset when such income is considered
to be received by a Trust.
2. Each Unitholder will be considered to have received all of the
dividends paid on his pro rata portion of each Security when such dividends
are considered to be received by the Trust regardless of whether such
dividends are used to pay a portion of the deferred sales charge.
Unitholders will be taxed in this manner regardless of whether distributions
from the Trust are actually received by the Unitholder or are automatically
reinvested (see "Unitholders-Distribution Reinvestment").
3. Each Unitholder will have a taxable event when the Trust disposes
of a Security (whether by sale, taxable exchange, liquidation, redemption, or
otherwise) or upon the sale or redemption of Units by such Unitholder (except
to the extent an in kind distribution of stocks is received by such
10
Unitholder as described below). The price a Unitholder pays for his Units,
generally including sales charges, is allocated among each Security held by
the Trust (in proportion to the fair market values thereof on the valuation
date nearest the date the Unitholder purchased his Units) in order to
determine his tax basis for his pro rata portion of each Security held by the
Trust. Unitholders should consult their own tax advisers with regard to the
calculation of basis. For Federal income tax purposes, a Unitholder's pro
rata portion of dividends, as defined by Section 316 of the Code, paid by a
corporation with respect to a Security held by the Trust is taxable as
ordinary income to the extent of such corporation's current and accumulated
"earnings and profits." A Unitholder's pro rata portion of dividends paid on
such Security which exceed such current and accumulated earnings and profits
will first reduce a Unitholder's tax basis in such Security, and to the
extent that such dividends exceed a Unitholder's tax basis in such Security
shall generally be treated as capital gain. In general, the holding period
for such capital gain will be determined by the period of time a Unitholder
has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption
of Units or the disposition of Securities held by the Trust will generally be
considered a capital gain (except in the case of a dealer or a financial
institution). A Unitholder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital loss (except in the case of a dealer or a
financial institution). Unitholders should consult their tax advisers
regarding the recognition of such capital gains and losses for Federal income
tax purposes. In particular, a Rollover Unitholder should be aware that a
Rollover Unitholder's loss, if any, incurred in connection with the exchange
of Units for units in the new series of the Trust (the "New Fund") will
generally be disallowed with respect to the disposition of any Securities
pursuant to such exchange to the extent that such Unitholder is considered
the owner of substantially identical securities under the wash sale
provisions of the Code taking into account such Unitholder's deemed ownership
of the securities underlying the Units in the New Fund in the manner
described above, if such substantially identical securities were acquired
within a period beginning 30 days before and ending 30 days after such
disposition. However, any gains incurred in connection with such an exchange
by a Rollover Unitholder would be recognized. Unitholders should consult
their tax advisers regarding the recognition of gains and losses for federal
income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes sales
charges, and such charges are not deductible. A portion of the sales charge for
the Trust is deferred. The income (or proceeds from redemption) a Unitholder
must take into account for Federal income tax purposes is not reduced by amounts
deducted to pay the deferred sales charge. Unitholders should consult their own
tax advisers as to the income tax consequences of the deferred sales charge.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by the Trust (to the extent such
dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such corporation
directly owned the Securities paying such dividends (other than corporate
shareholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Final regulations have
been issued
11
which address special rules that must be considered in determining whether the
46 day holding period requirement is met. Moreover, the allowable percentage of
the deduction will be reduced from 70% if a corporate Unitholder owns certain
stock (or Units) the financing of which is directly attributable to indebtedness
incurred by such corporation. It should be noted that various legislative
proposals that would affect the dividends received deduction have been
introduced. Unitholders should consult with their tax advisers with respect to
the limitations on and possible modifications to the dividends received
deduction.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. It should be noted that as a result of the Tax Reform Act of 1986,
certain miscellaneous itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be deductible by an
individual only to the extent they exceed 2% of such individual's adjusted gross
income. Unitholders may be required to treat some or all of the expenses of a
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by the Trust
or Disposition of Units. As discussed above, a Unitholder may recognize taxable
gain (or loss) when a Security is disposed of by the Trust or if the Unitholder
disposes of a Unit (although losses incurred by Rollover Unitholders may be
subject to disallowance as discussed below). The Internal Revenue Service
Restructuring and Reform Act of 1998 (the "1998 Tax Act") provides that for
taxpayers other than corporations, net capital gain (which is defined as net
long-term capital gain over net short-term capital loss for the taxable year)
realized from property (with certain exclusions) is subject to a maximum
marginal stated tax rate of 20% (10% in the case of certain taxpayers in the
lowest tax bracket). Capital gain or loss is long-term if the holding period
for the asset is more than one year, and is short-term if the holding period for
the asset is one year or less. The date on which a Unit is acquired (i.e., the
"trade date") is excluded for purposes for determining the holding period of the
Unit. The legislation is generally effective retroactively for amounts properly
taken into account on or after January 1, 1998. Capital gains realized from
assets held for one year or less are taxed at the same rates as ordinary income.
In addition, please note that capital gains may be recharacterized as ordinary
income in the case of certain financial transactions that are considered
"conversion transactions" effective for transactions entered into after April
30, 1993. Unitholders and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on their investment in
Units.
If a Unitholder disposes of a Unit, he is deemed thereby to dispose of his
entire pro rata interest in all assets of the Trust involved including his pro
rata portion of all Securities represented by a Unit. The Taxpayer Relief Act
of 1997 (the "1997 Tax Act") includes provisions that treat certain transactions
designed to reduce or eliminate risk of loss and opportunities for gain (e.g.,
short sales, off-setting notional principal contracts, futures or forward
contracts, or similar transactions) as constructive sales for purposes of
recognition of gain (but not loss) and for purposes of determining the holding
period. Unitholders should consult their own tax advisers with regard to any
constructive sale rules.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the Trust. As discussed in "Redemption," under certain
circumstances a Unitholder tendering Units for redemption may request an In Kind
Distribution. A Unitholder may also under certain circumstances request an In
Kind
12
Distribution upon termination of the Trust. See "Administration of the Trust-
Amendment and Termination." The Unitholder requesting an In Kind Distribution
will be liable for expenses related thereto (the "Distribution Expenses") and
the amount of such In Kind Distribution will be reduced by the amount of the
Distribution Expenses. See "Redemption." As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unitholder is considered
as owning a pro rata portion of each of the Trust's assets for federal income
tax purposes. The receipt of an In Kind Distribution will result in a
Unitholder receiving an undivided interest in whole shares of stock plus,
possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution with
respect to each Security held by the Trust will depend on whether or not a
Unitholder receives cash in addition to Securities. A "Security" for this
purpose is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
Securities in exchange for his or her pro rata portion in the Securities held by
the Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a Security held by the Trust, such Unitholder will generally
recognize gain or loss based on the difference between the amount of cash
received by the Unitholder and his tax basis in such fractional share of a
Security held by a Trust.
Because the Trust will own many Securities, a Unitholder who requests an In Kind
Distribution will have to analyze the tax consequences with respect to each
Security owned by a Trust. The amount of taxable gain (or loss) recognized upon
such exchange will generally equal the sum of the gain (or loss) recognized
under the rules described above by such Unitholder with respect to each Security
owned by the Trust. Unitholders who request an In Kind Distribution are advised
to consult their tax advisers in this regard.
As discussed in "Rollover in New Trust," a Unitholder may elect to become a
Rollover Unitholder. To the extent a Rollover Unitholder exchanges his Units
for Units of the New Fund in a taxable transaction, such Unitholder will
recognize gains, if any, but generally will not be entitled to a deduction for
any losses recognized upon the disposition of any Securities pursuant to such
exchange to the extent that such Unitholder is considered the owner of
substantially identical securities under the wash sale provisions of the Code
taking into account such Unitholder's deemed ownership of the securities
underlying the Units in the 1999 or 2000 Fund in the manner described above, if
such substantially identical securities were acquired within a period beginning
30 days before and ending 30 days after such disposition under the wash sale
provisions contained in Section 1091 of the Code. In the event a loss is
disallowed under the wash sale provisions, special rules contained in Section
1091 (d) of the Code apply to determine the Unitholder's tax basis in the
securities acquired. Rollover Unitholders are advised to consult their tax
advisers.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax basis
in his Units will generally equal the price paid by such Unitholder for his
Units. The cost of the Units is allocated among the Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of each
Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary income
as described above.
13
Other Matters. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by the Trust (other than those
that are not treated as United States source income, if any) will generally be
subject to United States income taxation and withholding in the case of Units
held by nonresident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisers.
At the termination of the Trust, the Trustee will furnish to each Unitholder of
the Trust a statement containing information relating to the dividends received
by the Trust on the Securities, the gross proceeds received by the Trust from
the disposition of any Security (resulting from redemption or the sale of any
Security), and the fees and expenses paid by the Trust. The Trustee will also
furnish annual information returns to Unitholders and to the Internal Revenue
Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
The foregoing discussion relates only to the tax treatment of U.S. Unitholders
with regard to United States Federal income tax. Unitholders may be subject to
foreign, state and local taxation in other jurisdictions and should consult
their own tax advisers in this regard. As used herein, the term "U.S.
Unitholder" means an owner of a Unit of the Trust that (a) is (i) for United
States federal income tax purposes a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in or under
the laws of the United States or any political subdivision thereof, or (iii) an
estate or trust the income of which is subject to United States federal income
taxation regardless of its source or (b) does not qualify as a U.S. Unitholder
in paragraph (a) but whose income from a Unit is effectively connected with such
Unitholder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and gain on
the Units will be taxable. Unitholders should consult their tax advisers
regarding potential foreign, state or local taxation with respect to the Units.
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE. The Public Offering Price per Unit of the Trust is based
on the aggregate underlying value of the Securities in a Trust plus the initial
sales charge described below. The initial sales charge for the Trust is equal
to the difference between the maximum sales charge and the maximum deferred
sales charge. The maximum sales charge is 2.90% of the Public Offering Price
(equivalent to 2.987% of the net amount invested). The deferred sales charge
will be collected as described in the "Fee Table". The total amount of deferred
sales charge payments will be $0.19 per Unit. Units purchased subsequent to the
initial deferred sales charge payment will be subject to the initial sales
charge and the remaining deferred sales charge payments. Units sold or redeemed
prior to such time as the entire applicable deferred sales charge has been
collected will be assessed the remaining deferred sales charge at the time of
such sale or redemption. A portion of the Public Offering Price includes an
amount of Securities to pay for all or a portion of the costs incurred in
organizing the Trust, including the cost of preparing documents relating to the
Trust (such as the prospectus, trust agreement
14
and closing documents, and federal and state registration fees), initial fees
and expenses of the Trustee, certain legal and audit expenses and certain other
out-of-pocket expenses.
Subsequent to the Initial Date of Deposit, the initial sales charge for the
Trust will vary with changes in the aggregate value of the Securities. The
deferred sales charge payments for the Trust will be paid from funds in the
Capital Account of the Trust, if sufficient, or from the periodic sale of
Securities from the Trust. In addition, a pro rata portion of the cash, if any,
in the Income and Capital Accounts of the Trust will be added to the Public
Offering Price per Unit of the Trust. If Units of the Trust were purchased on
the Initial Date of Deposit and held until the mandatory termination of the
Trust, the total sales charge paid would be that amount set forth below.
The sales charges for the Trust will be reduced on a graduated basis as set
forth in the following table:
Total Sales Charge
--------------------------
Percent of Percent of
Offering Net Amount
Number of Units* Price Invested
---------------- ---------- ----------
Less than 5,000 2.90% 2.987%
5,000-9,999 ____% _____%
10,000-14,999 ____% _____%
15,000 or more ____% _____%
- --------------------
<FN>
* The breakpoint sales charges are also applied on a dollar basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied
on whichever basis is more favorable to the investor.
</FN>
Units may be purchased in the primary or secondary market at the Public Offering
Price less the concession the Sponsor typically allows to dealers and other
selling agents for purchases (see "Public Distribution of Units") by officers,
directors and employees of the Sponsor and its affiliates and registered
representatives of selling firms and by investors who purchase Units through
registered investment advisers, certified financial planners or registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management services, or provide such
services in connection with the establishment of an investment account for which
a comprehensive "wrap fee" charge is imposed.
Unitholders of any Kemper Equity Portfolio Trust series and unitholders of any
Ranson or EVEREN common stock unit investment trust series (including Value Line
#1 Strategy Trust) may utilize their redemption or termination proceeds to
purchase Units of the Trust subject only to the deferred sales charge described
herein.
Unitholders of unaffiliated unit investment trusts having an investment strategy
similar to the investment strategy of the Trust may utilize proceeds received
upon termination or upon redemption immediately preceding termination of such
unaffiliated trust to purchase Units of the Trust subject only to the deferred
sales charge described herein.
15
A purchaser desiring to purchase during a 13 month period $500,000 or more of
any combination of series of Ranson Unit Investment Trusts may qualify for a
reduced sales charge by signing a nonbinding Letter of Intent with any single
broker-dealer. After signing a Letter of Intent, at the date total purchases,
less redemptions, of units of any combination of series of Ranson Unit
Investment Trusts by a purchaser (including units purchased in the name of the
spouse of a purchaser or in the name of a child of such purchaser under 21 years
of age) exceed $500,000, the selling broker-dealer, bank or other will credit
the unitholder with cash as a retroactive reduction of the sales charge on such
units equal to the amount which would have been paid for the total aggregated
sale amount. If a purchaser does not complete the required purchases under the
Letter of Intent within the 13 month period, no such retroactive sales charge
reduction shall be made. To qualify as a purchase under a Letter of Intent each
purchase of units of Ranson Unit Investment Trusts must equal or exceed
$100,000.
As indicated above, the initial Public Offering Price of the Units was
established by dividing the aggregate underlying value of the Securities by the
number of Units outstanding. Such price determination as of the opening of
business on the Initial Date of Deposit was made on the basis of an evaluation
of the Securities in the Trust prepared by the Trustee. After the opening of
business on the Initial Date of Deposit, the Evaluator will appraise or cause to
be appraised daily the value of the underlying Securities as of 3:15 P.M.
Central time on days the New York Stock Exchange is open and will adjust the
Public Offering Price of the Units commensurate with such valuation. Such
Public Offering Price will be effective for all orders received at or prior to
3:15 p.m. Central Time on each such day. Orders received by the Trustee,
Sponsor or any dealer for purchases, sales or redemptions after that time, or on
a day when the New York Stock Exchange is closed, will be held until the next
determination of price.
The value of the Securities is determined on each business day by the Evaluator
based on the closing sale prices on the New York Stock Exchange or by taking
into account the same factors referred to under "Redemption-Computation of
Redemption Price."
The minimum purchase in both the primary and secondary markets is 100 Units (25
Units for retirement plans or Uniform Gifts to Minors Act purchases).
PUBLIC DISTRIBUTION OF UNITS. During the initial offering period, Units of the
Trust will be distributed to the public at the Public Offering Price thereof.
Upon the completion of the initial offering, Units which remain unsold or which
may be acquired in the secondary market (see "Market for Units") may be offered
at the Public Offering Price determined in the manner provided above.
The Sponsor intends to qualify Units of the Trust for sale in a number of
states. Units will be sold through dealers who are members of the National
Association of Securities Dealers, Inc. and through others. Sales may be made
to or through dealers at prices which represent discounts from the Public
Offering Price as set forth below. Certain commercial banks are making Units of
the Trust available to their customers on an agency basis. A portion of the
sales charge paid by their customers is retained by or remitted to the banks in
the amounts shown below. 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. In addition, state
securities laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law. The Sponsor reserves the right to
16
change the discounts set forth below from time to time. In addition to such
discounts, the Sponsor may, from time to time, pay or allow an additional
discount, in the form of cash or other compensation, to dealers employing
registered representatives who sell, during a specified time period, a minimum
dollar amount of Units of the Trust and other unit investment trusts
underwritten by the Sponsor. At various times the Sponsor may implement
programs under which the sales force of a broker or dealer may be eligible to
win nominal awards for certain sales efforts, or under which the Sponsor will
reallow to any such broker or dealer that sponsors sales contests or recognition
programs conforming to criteria established by the Sponsor, or participates in
sales programs sponsored by the Sponsor, an amount not exceeding the total
applicable sales charges on the sales generated by such person at the public
offering price during such programs. Also, the Sponsor in its discretion may
from time to time pursuant to objective criteria established by the Sponsor pay
fees to qualifying brokers or dealers for certain services or activities which
are primarily intended to result in sales of Units of the Trust. Such payments
are made by the Sponsor out of its own assets, and not out of the assets of the
Trust. These programs will not change the price Unitholders pay for their Units
or the amount that the Trust will receive from the Units sold. The difference
between the discount and the sales charge will be retained by the Sponsor.
PRIMARY MARKET FIRM SALES
OR ARRANGEMENTS
(VOLUME CONCESSIONS
IN $1000)**
REGULAR CONCESSION ----------------------------
NUMBER OF UNITS* OR AGENCY COMMISSION $500-$999 $1,000 OR MORE
---------------- -------------------- --------- --------------
Less than 5,000 ____% ____% ____%
5,000 but less than 10,000 ____ ____ ____
10,000 but less than 15,000 ____ ____ ____
15,000 or more ____ ____ ____
Rollover Sales ____ ____ ____
<FN>
* The breakpoint discounts are also applied on a dollar basis utilizing a
breakpoint equivalent in the above table of $10 per Unit.
** Volume concessions of up to the amount shown can be earned as a marketing
allowance at the discretion of the Sponsor through _______________ by firms
who reach cumulative firm sales arrangement levels of at least $500,000.
After a firm has met the minimum $500,000 volume level, volume concessions
may be given on all trades after _______________ originated from or by that
firm, including those placed prior to reaching the $500,000 level, and may
continue to be given during the entire initial offering period. Firm sales
of any Ranson equity trust series issued simultaneously can be combined for
the purposes of achieving the volume discount. Only sales through Ranson
qualify for volume discounts and secondary purchases do not apply. The
Sponsor reserves the right to modify or change those parameters at any time
and make the determination of which firms qualify for the marketing allowance
and the amount paid.
</FN>
A special additional payment of 0.25%, 0.30% or 0.35% in lieu of the volume
concessions noted above will be made to firms whose sales of The Value Line #1
Strategy Trust combined, including future series of The Value Line #1 Strategy
Trust, exceed $3.5 million, $5.0 million or $7.0 million, respectively, during
any calendar month. A firm may also earn the above special payment for all
sales of The Value Line #1 Strategy Trust to the
17
extent that it was not otherwise earned, by achieving monthly average sales of
The Value Line #1 Strategy Trust, including future series of The Value Line #1
Strategy Trust, equal to the above sales amounts during the period
_______________ through _______________. Rollover sales will count toward a
firm achieving the aforementioned total sales, however, such rollover sales will
not be eligible for the special additional payment.
The Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units.
SPONSOR PROFITS. The Sponsor will receive gross sales charges equal to the
percentage of the Public Offering Price of the Units of the Trust as stated
under "Public Offering Price." In addition, the Sponsor may realize a profit (or
sustain a loss) as of the Initial Date of Deposit resulting from the difference
between the purchase prices of the Securities to the Sponsor and the cost of
such Securities to the Trust, which is based on the evaluation of the Securities
on the Initial Date of Deposit. Thereafter, on subsequent deposits the Sponsor
may realize profits or sustain losses from such deposits. See "Portfolio." The
Sponsor may realize additional profits or losses during the initial offering
period on unsold Units as a result of changes in the daily market value of the
Securities in the Trust.
MARKET FOR UNITS
After the initial offering period, while not obligated to do so, the Sponsor
intends to, subject to change at any time, maintain a market for Units of the
Trust offered hereby and to continuously offer to purchase said Units at prices,
determined by the Evaluator, based on the closing sale prices of the Securities.
To the extent that a market is maintained during the initial offering period,
the prices at which Units will be repurchased will be based upon the aggregate
closing sale prices of the Securities in the Trust. Accordingly, Unitholders
who wish to dispose of their Units should inquire of their 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. Unitholders who
sell or redeem Units prior to such time as the entire applicable deferred sales
charge on such Units has been collected will be assessed the amount of the
remaining deferred sales charge at the time of such sale or redemption. The
offering price of any Units resold by the Sponsor will be in accord with that
described in the currently effective prospectus describing such Units. Any
profit or loss resulting from the resale of such Units will belong to the
Sponsor. The Sponsor may suspend or discontinue purchases of Units of the Trust
if the supply of Units exceeds demand, or for other business reasons.
REDEMPTION
GENERAL. A Unitholder who does not dispose of Units in the secondary market
described above may cause Units to be redeemed by the Trustee by making a
written request to the Trustee at its unit investment trust office in the city
of New York and, in the case of Units evidenced by a certificate, by tendering
such certificate to the Trustee, properly endorsed or accompanied by a written
instrument or instruments of transfer in a form satisfactory to the Trustee.
Unitholders must sign the request, and such certificate or transfer instrument,
exactly as their names appear on the records of the Trustee and on any
certificate representing the Units to be redeemed. If the amount of the
redemption is $500 or less and the proceeds are payable to the Unitholder(s) of
record at the address of record, no signature guarantee is necessary for
redemptions by individual account owners (including joint owners). Additional
documentation may be requested, and a signature guarantee is always required,
from corporations, executors, administrators, trustees, guardians or
associations. The signatures must be guaranteed by a participant in the
Securities Transfer Agents Medallion Program
18
("STAMP") or such other signature guaranty program in addition to, or in
substitution for, STAMP, as may be accepted by the Trustee. A certificate
should only be sent by registered or certified mail for the protection of the
Unitholder. Since tender of the certificate is required for redemption when one
has been issued, Units represented by a certificate cannot be redeemed until the
certificate representing such Units has been received by the purchasers.
Redemption shall be made by the Trustee no later than the seventh calendar day
following the day on which a tender for redemption is received (the "Redemption
Date"), or if the seventh calendar day is not a business day, on the first
business day prior thereto, by payment of cash equivalent to the Redemption
Price for the Trust, determined as set forth below under "Computation of
Redemption Price," as of the evaluation time stated under "Essential
Information," next following such tender, multiplied by the number of Units
being redeemed. Any Units redeemed shall be canceled and any undivided
fractional interest in the Trust extinguished. The price received upon
redemption might be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the Trust at the time of redemption.
Unitholders who sell or redeem Units prior to such time as the entire applicable
deferred sales charge on such Units has been collected will be assessed the
amount of the remaining deferred sales charge at the time of such sale or
redemption.
Under regulations issued by the Internal Revenue Service, the Trustee is
required to withhold a specified percentage of the principal amount of a Unit
redemption if the Trustee has not been furnished the redeeming Unitholder's tax
identification number in the manner required by such regulations. Any amount so
withheld is transmitted to the Internal Revenue Service and may be recovered by
the Unitholder only when filing a tax return. Under normal circumstances the
Trustee obtains the Unitholder's tax identification number from the selling
broker. However, any time a Unitholder elects to tender Units for redemption,
such Unitholder should make sure that the Trustee has been provided a certified
tax identification number in order to avoid this possible "back-up withholding."
In the event the Trustee has not been previously provided such number, one must
be provided at the time redemption is requested.
Any amounts paid on redemption representing unpaid dividends shall be withdrawn
from the Income Account of the Trust to the extent that funds are available for
such purpose. All other amounts paid on redemption shall be withdrawn from the
Capital Account for the Trust. The Trustee is empowered to sell Securities for
the Trust in order to make funds available for the redemption of Units of the
Trust. Such sale may be required when Securities would not otherwise be sold
and might result in lower prices than might otherwise be realized.
Unitholders tendering Units for redemption may request a distribution in kind (a
"Distribution In Kind") from the Trustee in lieu of cash redemption. A
Unitholder may request a Distribution In Kind of an amount and value of
Securities per Unit equal to the Redemption Price per Unit as determined as of
the evaluation time next following the tender, provided that the tendering
Unitholder is (1) entitled to receive at least $25,000 of proceeds as part of
his or her distribution or if he paid at least $25,000 to acquire the Units
being tendered and (2) the Unitholder has elected to redeem prior to the date
specified under "Redemption In Kind" under "Summary" in this Prospectus. If the
Unitholder meets these requirements, a Distribution In Kind will be made by the
Trustee through the distribution of each of the Securities of the Trust in book
entry form to the account of the Unitholder's bank or broker-dealer at
Depository Trust Company. The tendering Unitholder shall be entitled to receive
whole shares of each of the Securities comprising the portfolio of a Trust and
cash from the Capital Account equal to the fractional shares to which the
tendering Unitholder is entitled. Unitholders who redeem Units prior to such
time as the entire applicable deferred sales charge on such Units has been
collected
19
will be assessed the amount of the remaining deferred sales charge at the time
of such redemption. The Trustee shall make any adjustments necessary to reflect
differences between the Redemption Price of the Units and the value of the
Securities distributed in kind as of the date of tender. If funds in the
Capital Account are insufficient to cover the required cash distribution to the
tendering Unitholder, the Trustee may sell Securities. The in kind redemption
option may be terminated by the Sponsor on a date other than that specified
under "Redemption In Kind" under "Summary" in this Prospectus upon notice to the
Unitholders prior to the specified date.
To the extent that Securities are redeemed in kind or sold, the size (and
possibly the diversity) of the Trust will be reduced but each remaining Unit
will continue to represent approximately the same proportional interest in each
Security. Sales may be required at a time when Securities would not otherwise
be sold and may result in lower prices than might otherwise be realized. The
price received upon redemption may be more or less than the amount paid by the
Unitholder depending on the value of the Securities in the portfolio at the time
of redemption.
The right of redemption may be suspended and payment postponed (1) for any
period during which the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or during which (as determined by the Securities
and Exchange Commission) trading on the New York Stock Exchange is restricted;
(2) for any period during which an emergency exists as a result of which
disposal by the Trustee of Securities is not reasonably practicable or it is not
reasonably practicable to fairly determine the value of the underlying
Securities in accordance with the Trust Agreement; or (3) for such other period
as the Securities and Exchange Commission may by order permit. The Trustee is
not liable to any person in any way for any loss or damage which may result from
any such suspension or postponement.
COMPUTATION OF REDEMPTION PRICE. The Redemption Price per Unit (as well as the
secondary market Public Offering Price) will generally be determined on the
basis of the closing sale price of the Securities in the Trust. On the Initial
Date of Deposit, the Public Offering Price per Unit (which is based on the
closing sale prices of the Securities and includes the sales charge) exceeded
the value at which Units could have been redeemed by the amount shown under
"Essential Information." While the Trustee has the power to determine the
Redemption Price per Unit when Units are tendered for redemption, such authority
has been delegated to the Evaluator which determines the price per Unit on a
daily basis. The Redemption Price per Unit is the pro rata share of each Unit
in the Trust determined on the basis of (i) the cash on hand in the Trust or
moneys in the process of being collected and (ii) the value of the Securities in
the Trust less (a) amounts representing taxes or other governmental charges
payable out of the Trust, (b) any amount owing to the Trustee for its advances
and (c) the accrued expenses of the Trust. The Evaluator may determine the
value of the Securities in the Trust in the following manner: if the Security is
listed on a national securities exchange or the Nasdaq National Market, the
evaluation will generally be based on the last sale price on the exchange or
Nasdaq (unless the Evaluator deems the price inappropriate as a basis for
evaluation). If the Security is not so listed or, if so listed and the
principal market for the Security is other than on the exchange or system, the
evaluation will generally be made by the Evaluator in good faith based on the
last bid price on the over-the-counter market (unless the Evaluator deems such
price inappropriate as a basis for evaluation) or, if a bid price is not
available, (1) on the basis of the current bid price for comparable securities,
(2) by the Evaluator's appraising the value of the Securities in good faith at
the bid side of the market or (3) by any combination thereof. Any such
evaluation made during the initial offering period will be made based on the ask
price of any applicable Securities. See "Public Offering of Units-Public
Offering Price." During the initial offering period, the redemption price and
secondary market repurchase price include estimated organizational costs.
20
ROLLOVER IN NEW TRUST
It is expected that a special redemption will be made of all Units of the Trust
held by any Unitholder (a "Rollover Unitholder") who affirmatively notifies the
Trustee in writing that he desires to rollover his Units in the Trust no later
than five business days before the Rollover Date specified in "Essential
Information".
All Units of Rollover Unitholders will be redeemed on the Rollover Date, and the
underlying Securities will be distributed to the Distribution Agent on behalf of
such Rollover Unitholders. On the Rollover Date the Distribution Agent will be
required to sell all of the underlying Securities on behalf of Rollover
Unitholders. The sales proceeds will be net of brokerage fees, governmental
charges or any expenses involved in the sales.
The Distribution Agent will attempt to sell the Securities as quickly as is
practicable on the Rollover Date. The Sponsor does not anticipate that the
selling period will be longer than one day given that the Securities are usually
highly liquid. The liquidity of any Security depends on the daily trading
volume of the Security and the amount that the Sponsor has available for sale on
any particular day.
Pursuant to an exemptive order from the Securities and Exchange Commission, each
terminating Trust (and the Distribution Agent on behalf of Rollover Unitholders)
may sell Securities to the New Fund if those Securities continue to meet the
individual Trust's strategy as set forth under "The Fund." The exemption will
enable the Trust to eliminate commission costs on these transactions. The price
for those Securities will be the closing sale price on the sale date on the
exchange where the Securities are principally traded, as certified by the
Sponsor and confirmed by the Trustee of the Trust.
The Rollover Unitholders' proceeds will be invested in the following subsequent
series of the Trust (the "New Fund"), if then being offered. The proceeds of
redemption will be used to buy New Fund units in the appropriate portfolio as
the proceeds become available.
The Sponsor intends to create the New Fund shortly prior to the Rollover Date,
dependent upon the availability and reasonably favorable prices of the
Securities included in the New Fund portfolio, and it is intended that Rollover
Unitholders will be given first priority to purchase the New Fund units. There
can be no assurance, however, as to the exact timing of the creation of the New
Fund or the aggregate number of units in the trust portfolio which the Sponsor
will create. The Sponsor may, in its sole discretion, stop creating new units
in the trust portfolio at any time it chooses, regardless of whether all
proceeds of the Rollover have been invested on behalf of Rollover Unitholders.
Cash which has not been invested on behalf of the Rollover Unitholders in New
Fund units will be distributed shortly after the Rollover Date.
Any Rollover Unitholder may then be redeemed out of the Trust and become a
holder of an entirely different unit investment trust in the New Fund with a
different portfolio of Securities. The Rollover Unitholders' Units will be
redeemed and the distributed Securities shall be sold on the Rollover Date. In
accordance with the Rollover Unitholders' offer to purchase the New Fund units,
the proceeds of the sales (and any other cash distributed upon redemption) will
be invested in the New Fund in the appropriate portfolio at the public offering
price, including the applicable sales charge per Unit (which for Rollover
Unitholders is currently expected to be 1.90% of the Public Offering Price of
the New Fund units per unit per year).
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This process of redemption and rollover into a new trust is intended to allow
for the fact that the portfolio selected by the Sponsor are chosen on the basis
of growth and income potential only for the near term, at which point a new
portfolio is chosen. It is contemplated that a similar process of redemption
and rollover in new unit investment trusts will be available for the New Fund
and each subsequent series of the Fund, approximately a year after that Series'
creation.
There can be no assurance that the redemption and rollover in a new trust will
avoid any negative market price consequences stemming from the trading of large
volumes of securities and of the underlying Securities. The above procedures
may be insufficient or unsuccessful in avoiding such price consequences. In
fact, market price trends may make it advantageous to sell or buy more quickly
or more slowly than permitted by these procedures.
It should also be noted that Rollover Unitholders may realize taxable capital
gains in the Rollover but, in certain circumstances, will not be entitled to a
deduction for certain capital losses and, due to the procedures for investing in
the subsequent Trust, no cash would be distributed at that time to pay any
taxes. Included in the cash for the Rollover will be any amount of cash
attributable to the last distribution of dividend income; accordingly, Rollover
Unitholders also will not have such cash distributed to pay any taxes. See
"Federal Tax Status". Unitholders who do not inform the Distribution Agent that
they wish to have their Units so redeemed and liquidated will not realize
capital gains or losses due to the Rollover and will not be charged any
additional sales charge.
The Sponsor may for any reason, in its sole discretion, decide not to sponsor
the New Fund or any subsequent series of the Fund, without penalty or incurring
liability to any Unitholder. If the Sponsor so decides, the Sponsor shall
notify the Unitholders before the Rollover Date would have commenced. The
Sponsor may modify the terms of the New Fund or any subsequent series of the
Fund. The Sponsor may also modify the terms of the Rollover in the New Fund
upon notice to the Unitholders.
RETIREMENT PLANS
The Trust may be well suited for purchase by individual Retirement Accounts,
Keogh Plans, pension funds and other qualified retirement plans. Generally,
capital gains and income received under each of the foregoing plans are deferred
from federal taxation. All distributions from such plans are generally treated
as ordinary income but may, in some cases, be eligible for special income
averaging or tax-deferred rollover treatment. Investors considering
participation in any such plan should review specific tax laws related thereto
and should consult their attorneys or tax advisers with respect to the
establishment and maintenance of any such plan. Such plans are offered by
brokerage firms and other financial institutions. The Trust will waive the
$1,000 minimum investment requirement for IRA accounts. The minimum investment
is $250 for tax-deferred plans such as IRA accounts. Fees and charges with
respect to such plans may vary.
The Trustee has agreed to act as custodian for certain retirement plan accounts.
An annual fee of $12.00 per account, if not paid separately, will be assessed by
the Trustee and paid through the liquidation of shares of the reinvestment
account. An individual wishing the Trustee to act as custodian must complete a
Ranson UIT/IRA application and forward it along with a check made payable to The
Bank of New York. Certificates for Individual Retirement Accounts can not be
issued.
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UNITHOLDERS
OWNERSHIP OF UNITS. Ownership of Units of the Trust will not be evidenced by
certificates unless a Unitholder, the Unitholder's registered broker/dealer or
the clearing agent for such broker/dealer makes a written request to the
Trustee. Units are transferable by making a written request to the Trustee and,
in the case of Units evidenced by a certificate, by presenting and surrendering
such certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer which should be sent by registered or
certified mail for the protection of the Unitholder. Unitholders must sign such
written request, and such certificate or transfer instrument, exactly as their
names appear on the records of the Trustee and on any certificate representing
the Units to be transferred. Such signatures must be guaranteed as stated under
"Redemption-General."
Units may be purchased and certificates, if requested, will be issued in
denominations of one Unit or any multiple thereof, subject to the Trust's
minimum investment requirement of 100 Units or $1,000. Fractions of Units, if
any, will be computed to three decimal places. Any certificate issued will be
numbered serially for identification, issued in fully registered form and will
be transferable only on the books of the Trustee. The Trustee may require a
Unitholder to pay a reasonable fee, to be determined in the sole discretion of
the Trustee, for each certificate re-issued or transferred and to pay any
governmental charge that may be imposed in connection with each such transfer or
interchange. The Trustee at the present time does not intend to charge for the
normal transfer or interchange of certificates. Destroyed, stolen, mutilated or
lost certificates will be replaced upon delivery to the Trustee of satisfactory
indemnity (generally amounting to 3% of the market value of the Units),
affidavit of loss, evidence of ownership and payment of expenses incurred.
DISTRIBUTIONS TO UNITHOLDERS. Dividend income received by the Trust is credited
by the Trustee to the Income Account of a Trust. Other receipts are credited to
the Capital Account of the Trust. Income received by the Trust will be
distributed on or shortly after the Record and Computation Dates of each year on
a pro rata basis to Unitholders of record as of the preceding Record and
Computation Date. All distributions will be net of applicable expenses. There
is no assurance that any actual distributions will be made since all dividends
received may be used to pay expenses. in addition, if the balance of the Capital
Account of the Trust exceeds 1% of the net assets of a Trust, the balance of
such Account will be distributed on the fifteenth day of the subsequent month to
Unitholders of record on the first day of such month. Proceeds received from
the disposition of any of the Securities after a Record and Computation Date and
prior to the following Distribution Date will be held in the Capital Account and
not distributed until the next Distribution Date applicable to the Capital
Account. The Trustee shall be required to make a distribution from the Capital
Account as described under "Essential Information." The Trustee is not required
to pay interest on funds held in the Capital or income Accounts (but may itself
earn interest thereon and therefore benefits from the use of such funds). The
Trustee is authorized to reinvest any funds held in the Capital or Income
Accounts, pending distribution, in U.S. Treasury obligations which mature on or
before the next applicable Distribution Date. Any obligations so acquired must
be held until they mature and proceeds therefrom may not be reinvested.
The distribution to the Unitholders as of each record date will be made on the
following Distribution Date or shortly thereafter and shall consist of an amount
substantially equal to such portion of the Unitholders' pro rata share of the
dividend distributions then held in the Income Account after deducting estimated
expenses. Because dividends are not received by the Trust at a constant rate
throughout the year, such distributions to Unitholders are expected to
fluctuate. Persons who purchase Units will commence receiving distributions
only
23
after such person becomes a record owner. A person will become the owner of
Units, and thereby a Unitholder of record, on the date of settlement provided
payment has been received. Notification to the Trustee of the transfer of Units
is the responsibility of the purchaser, but in the normal course of business
such notice is provided by the selling broker-dealer.
As of the first day of each month, the Trustee will deduct from the Income
Account of the Trust and, to the extent funds are not sufficient therein, from
the Capital Account of a Trust amounts necessary to pay the expenses of a Trust
(as determined on the basis set forth under "Expenses of the Trust"). The
Trustee also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of the
Trust. Amounts so withdrawn shall not be considered a part of the Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the Trustee may withdraw from
the Income and Capital Accounts of the Trust such amounts as may be necessary to
cover redemptions of Units.
DISTRIBUTION REINVESTMENT. Unitholders may elect to have distributions of
capital (including capital gains, if any) or dividends or both automatically
invested into additional Units of the related Trust without an initial sales
charge. In addition, Unitholders may elect to have distributions of capital
(including capital gains, if any) or dividends or both automatically invested
without charge in shares of certain mutual funds underwritten or advised by
Scudder Kemper Investments, Inc. at net asset value if such funds are registered
in such Unitholder's state of residence. Since the portfolio securities and
investment objectives of such mutual funds generally will differ significantly
from those of the Trust, Unitholders should carefully consider the consequences
before selecting such mutual funds for reinvestment. Detailed information with
respect to the investment objectives and the management of such mutual funds is
contained in their respective prospectuses, which can be obtained from the
Sponsor upon request. An investor should read the prospectus of the
reinvestment fund selected prior to making the election to reinvest.
Unitholders who desire to have such distributions automatically reinvested
should inform their broker at the time of purchase or should file with the
Program Agent referred to below a written notice of election.
Unitholders who are receiving distributions in cash may elect to participate in
distribution reinvestment by filing with the Program Agent an election to have
such distributions reinvested without charge. Such election must be received by
the Program Agent at least ten days prior to the Record and Computation Date
applicable to any distribution in order to be in effect for such Record Date.
Any such election shall remain in effect until a subsequent notice is received
by the Program Agent. See "Unitholders-Distributions to Unitholders."
The Program Agent is The Bank of New York. All inquiries concerning
participating in distribution reinvestment should be directed to The Bank of New
York at its unit investment trust division office.
STATEMENTS TO UNITHOLDERS. With each distribution, the Trustee will furnish or
cause to be furnished to each Unitholder a statement of the amount of income and
the amount of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per Unit.
The accounts of the Trust are required to be audited annually, at the Trust's
expense, by independent public accountants designated by the Sponsor, unless the
Sponsor determines that such an audit would not be in the best interest of the
Unitholders of a Trust. The accountants' report will be furnished by the
Trustee to any Unitholder of the Trust upon written request. Within a
reasonable period of time after the end of each calendar
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year, the Trustee shall furnish to each person who at any time during the
calendar year was a Unitholder of the Trust a statement, covering the calendar
year, setting forth for a Trust:
A.As to the Income Account: (1) income received; (2) deductions for applicable
taxes and for fees and expenses of the Trust and for redemptions of Units, if
any; and (3) the balance remaining after such distributions and deductions,
expressed in each case both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year;
B.As to the Capital Account: (1) the dates of disposition of any Securities
and the net proceeds received therefrom; (2) deductions for payment of
applicable taxes and fees and expenses of the Trust held for distribution to
Unitholders of record as of a date prior to the determination; and (3) the
balance remaining after such distributions and deductions expressed both as a
total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; and
C.The following information: (1) a list of the Securities as of the last
business day of such calendar year; (2) the number of Units outstanding on
the last business day of such calendar year; (3) the Redemption Price based
on the last evaluation made during such calendar year; and (4) the amount
actually distributed during such calendar year from the Income and Capital
Accounts separately stated, expressed both as total dollar amounts and as
dollar amounts per Unit outstanding on the Record Dates for each such
distribution.
RIGHTS OF UNITHOLDERS. A Unitholder may at any time tender Units to the Trustee
for redemption. The death or incapacity of any Unitholder will not operate to
terminate the Trust nor entitle legal representatives or heirs to claim an
accounting or to bring any action or proceeding in any court for partition or
winding up of the Trust.
No Unitholder shall have the right to control the operation and management of
the Trust in any manner, except to vote with respect to the amendment of the
Trust Agreement or termination of a Trust.
INVESTMENT SUPERVISION
The Trust is a unit investment trusts and are not "actively managed" funds.
Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of economic,
financial and market analyses. The portfolio of the Trust, however, will not be
actively managed and therefore the adverse financial condition of an issuer will
not necessarily require the sale of its securities from the portfolio.
The Trust Agreement provides that the Sponsor may (but need not) direct the
Trustee to dispose of a Security in certain events such as the issuer having
defaulted on the payment on any of its outstanding obligations or the price of a
Security has declined to such an extent or other such credit factors exist so
that in the opinion of the Sponsor the retention of such Securities would be
detrimental to the Trust. Pursuant to the Trust Agreement and with limited
exceptions, the Trustee may sell any securities or other properties acquired in
exchange for Securities such as those acquired in connection with a merger or
other transaction. If offered such new or exchanged securities or property, the
Trustee shall reject the offer. However, in the event such securities or
property are nonetheless acquired by the Trust, they may be accepted for deposit
in a Trust and either sold by the Trustee or held in a Trust pursuant to the
direction of the Sponsor. Proceeds from the sale of Securities (or any
securities or other property received by the Trust in exchange for Securities)
are credited to the Capital
25
Account for distribution to Unitholders or to meet redemptions. Except as
stated under "The Fund" for failed securities or under "Unitholders-
Distributions to Unitholders" for short term investment in U.S. Treasury
obligations and as provided herein, the acquisition by the Trust of any
securities other than the Securities is prohibited. The Trustee may sell
Securities, designated by the Sponsor, from the Trust for the purpose of
redeeming Units of a Trust tendered for redemption and the payment of expenses.
ADMINISTRATION OF THE TRUST
THE TRUSTEE. The Trustee is The Bank of New York, the Trust company organized
under the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286, telephone 1-
800-701-8178. The Bank of New York is subject to supervision and examination by
the Superintendent of Banks of the State of New York and the Board of Governors
of the Federal Reserve System, and its deposits are insured by the Federal
Deposit Insurance Corporation to the extent permitted by law.
The Trustee, whose duties are ministerial in nature, has not participated in
selecting the portfolio of the Trust. For information relating to the
responsibilities of the Trustee under the Trust Agreement, reference is made to
the material set forth under "Unitholders."
In accordance with the Trust Agreement, the Trustee shall keep records of all
transactions at its office. Such records shall include the name and address of,
and the number of Units held by, every Unitholder of the Trust. Such books and
records shall be open to inspection by any Unitholder of the Trust at all
reasonable times during usual business hours. The Trustee shall make such
annual or other reports as may from time to time be required under any
applicable state or federal statute, rule or regulation. The Trustee shall keep
a certified copy or duplicate original of the Trust Agreement on file in its
office available for inspection at all reasonable times during usual business
hours by any Unitholder, together with a current list of the Securities held in
the Trust. Pursuant to the Trust Agreement, the Trustee may employ one or more
agents for the purpose of custody and safeguarding of Securities comprising the
Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of the trust created by the Trust Agreement by executing an
instrument in writing and filing the same with the Sponsor.
The Trustee or successor trustee must mail a copy of the notice of resignation
to all Unitholders then of record, not less than sixty days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. If the Trustee becomes
incapable of acting or becomes bankrupt or its affairs are taken over by public
authorities, the Sponsor may remove the Trustee and appoint a successor as
provided in the Trust Agreement. Notice of such removal and appointment shall
be mailed to each Unitholder by the Sponsor. Upon execution of a written
acceptance of such appointment by such successor trustee, all the rights,
powers, duties and obligations of the original Trustee shall vest in the
successor. The Trustee must be a corporation organized under the laws of the
United States, or any state thereof, be authorized under such laws to exercise
trust powers and have at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
26
THE SPONSOR. Ranson & Associates, Inc., the Sponsor of the Trust, is an
investment banking firm created in 1995 by a number of former owners and
employees of Ranson Capital Corporation. On November 26, 1996, Ranson &
Associates, Inc. purchased all existing unit investment trusts sponsored by
EVEREN Securities, Inc. Accordingly, Ranson & Associates, Inc. is the successor
sponsor to unit investment trusts formerly sponsored by EVEREN Unit Investment
Trusts, a service of EVEREN Securities, Inc. Ranson & Associates, Inc. is also
the sponsor and successor sponsor of Series of The Kansas Tax-Exempt Trust and
Multi-State Series of The Ranson Municipal Trust. Ranson & Associates, Inc. is
the successor to a series of companies, of first of which was originally
organized in Kansas in 1935. During its history, Ranson & Associates, Inc. and
its predecessors have been active in public and corporate finance and have sold
bonds and unit investment trusts and maintained secondary market activities
relating thereto. At present, Ranson & Associates, Inc., which is a member of
the National Association of Securities Dealers, Inc., is the Sponsor to each of
the above-named unit investment trusts and serves as the financial advisor and
as an underwriter for Kansas municipalities. The Sponsor's offices are located
at 250 North Rock Road, Suite 150, Wichita, Kansas 67206-2241.
If at any time the Sponsor shall fail to perform any of its duties under the
Trust Agreement or shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or shall have its affairs taken over by public
authorities, then the Trustee may (a) appoint a successor sponsor at rates of
compensation deemed by the Trustee to be reasonable and not exceeding such
reasonable amounts as may be prescribed by the Securities and Exchange
Commission, or (b) terminate the Trust Agreement and liquidate the Trust as
provided therein, or (c) continue to act as Trustee without terminating the
Trust Agreement.
THE SUPERVISOR AND EVALUATOR. Ranson & Associates, Inc., the Sponsor, also
serves as Supervisor and Evaluator. The Supervisor and Evaluator may resign or
be removed by the Trustee in which event the Trustee is to use its best efforts
to appoint a satisfactory successor. Such resignation or removal shall become
effective upon acceptance of appointment by the successor evaluator. If upon
resignation of the Supervisor and Evaluator no successor has accepted
appointment within thirty days after notice of resignation, the Supervisor and
Evaluator may apply to a court of competent jurisdiction for the appointment of
a successor. Notice of such registration or removal and appointment shall be
mailed by the Trustee to each Unitholder.
AMENDMENT AND TERMINATION. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders: (1) to cure any
ambiguity or to correct or supplement any provision which may be defective or
inconsistent; (2) to change any provision thereof as may be required by the
Securities and Exchange Commission or any successor governmental agency; or (3)
to make such provisions as shall not adversely affect the interests of the
Unitholders. The Trust Agreement with respect to the Trust may also be amended
in any respect by the Sponsor and the Trustee, or any of the provisions thereof
may be waived, with the consent of the holders of Units representing 66 2/3% of
the Units then outstanding of a Trust, provided that no such amendment or waiver
will reduce the interest of any Unitholder thereof without the consent of such
Unitholder or reduce the percentage of Units required to consent to any such
amendment or waiver without the consent of all Unitholders of a Trust. In no
event shall the Trust Agreement be amended to increase the number of Units of
the Trust issuable thereunder or to permit the acquisition of any Securities in
addition to or in substitution for those initially deposited in the Trust,
except in accordance with the provisions of the Trust Agreement. The Trustee
shall promptly notify Unitholders of the substance of any such amendment.
The Trust Agreement provides that the Trust shall terminate upon the
liquidation, redemption or other disposition of the last of the Securities held
in a Trust but in no event is it to continue beyond the Mandatory
27
Termination Date set forth under "Essential Information." If the value of the
Trust shall be less than the applicable minimum value stated under "Essential
Information" (40% of the aggregate value of the Securities based on the value at
the date of deposit of such Securities into the Trust), the Trustee may, in its
discretion, and shall, when so directed by the Sponsor, terminate a Trust. The
Trust may be terminated at any time by the holders of Units representing 66 2/3%
of the Units thereof then outstanding.
No later than the Mandatory Termination Date set forth under "Essential
Information," the Trustee will begin to sell all of the remaining underlying
Securities on behalf of Unitholders in connection with the termination of the
Trust. The Sponsor has agreed to assist the Trustee in these sales. The sale
proceeds will be net of any incidental expenses involved in the sales.
In the event of termination of the Trust, written notice thereof will be sent by
the Trustee to all Unitholders of a Trust. Within a reasonable period after
termination of the Trust the Trustee will sell any Securities remaining in a
Trust and, after paying all expenses and charges incurred by a Trust, will
distribute to Unitholders thereof (upon surrender for cancellation of
certificates for Units, if issued) their pro rata share of the balances
remaining in the Income and Capital Accounts of a Trust.
LIMITATIONS ON LIABILITY. The Sponsor: The Sponsor is liable for the
performance of its obligations arising from its responsibilities under the Trust
Agreement, but will be under no liability to the Unitholders for taking any
action or refraining from any action in good faith pursuant to the Trust
Agreement or for errors in judgment, except in cases of its own gross
negligence, bad faith or willful misconduct or its reckless disregard for its
duties thereunder. The Sponsor shall not be liable or responsible in any way
for depreciation or loss incurred by reason of the sale of any Securities.
The Trustee: The Trust Agreement provides that the Trustee shall be under no
liability for any action taken in good faith in reliance upon prima facie
properly executed documents or for the disposition of moneys, Securities or
certificates except by reason of its own negligence, bad faith or willful
misconduct, or its reckless disregard for its duties under the Trust Agreement,
nor shall the Trustee be liable or responsible in any way for depreciation or
loss incurred by reason of the sale by the Trustee of any Securities. In the
event that the Sponsor shall fail to act, the Trustee may act and shall not be
liable for any such action taken by it in good faith. The Trustee shall not be
personally liable for any taxes or other governmental charges imposed upon or in
respect of the Securities or upon the interest thereof. In addition, the Trust
Agreement contains other customary provisions limiting the liability of the
Trustee.
The Evaluator: The Trustee and Unitholders may rely on any evaluation furnished
by the Evaluator and shall have no responsibility for the accuracy thereof. The
Trust Agreement provides that the determinations made by the Evaluator shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the Trustee
or Unitholders for errors in judgment, but shall be liable for its gross
negligence, bad faith or willful misconduct or its reckless disregard for its
obligations under the Trust Agreement.
EXPENSES OF THE TRUST
The Sponsor will not charge the Trust any fees for services performed as
Sponsor. The Sponsor will receive a portion of the sale commissions paid in
connection with the purchase of Units and will share in profits, if any, related
to the deposit of Securities in the Trust.
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The Trustee receives for its services that fee set forth under "Essential
Information." However, in no event shall such fee amount to less than $2,000 in
any single calendar year for any Trust. The Trustee's fee which is calculated
monthly is based on the largest number of Units in the Trust outstanding during
the calendar year for which such compensation relates. The Trustee's fees are
payable monthly on or before the fifteenth day of the month from the Income
Account to the extent funds are available and then from the Capital Account.
The Trustee benefits to the extent there are funds for future distributions,
payment of expenses and redemptions in the Capital and Income Accounts since
these Accounts are non-interest bearing and the amounts earned by the Trustee
are retained by the Trustee. Part of the Trustee's compensation for its
services to the Trust is expected to result from the use of these funds. For
evaluation of the Securities in the Trust, the Evaluator shall receive that fee
set forth under "Essential Information", payable monthly, based upon the largest
number of Units outstanding during the calendar year for which such compensation
relates. The Trustee's fees and the Evaluator's fees are deducted from the
Income Account of the Trust to the extent funds are available and then from the
Capital Account. Each such fee may be increased without approval of Unitholders
by amounts not exceeding a proportionate increase in the Consumer Price Index or
any equivalent index substituted therefor.
The Trust will pay a license fee to Value Line Publishing, Inc. for use of
certain trademarks.
The following charges are or may be incurred by the Trust: (a) fees for the
Trustee's extraordinary services; (b) expenses of the Trustee (including legal
and auditing expenses, but not including any fees and expenses charged by an
agent for custody and safeguarding of Securities) and of counsel, if any; (c)
various governmental charges; (d) expenses and costs of any action taken by the
Trustee to protect the Trust or the rights and interests of the Unitholders; (e)
indemnification of the Trustee for any loss, liability or expense incurred by it
in the administration of the Trust not resulting from gross negligence, bad
faith or willful misconduct on its part or its reckless disregard for its
obligations under the Trust Agreement; (f) indemnification of the Sponsor for
any loss, liability or expense incurred in acting in that capacity without gross
negligence, bad faith or willful misconduct or its reckless disregard for its
obligations under the Trust Agreement; and (g) expenditures incurred in
contacting Unitholders upon termination of the Trust. The fees and expenses set
forth herein are payable out of the Trust and, when owing to the Trustee, are
secured by a lien on the Trust. Since the Securities are all common stocks, and
the income stream produced by dividend payments, if any, is unpredictable, the
Sponsor cannot provide any assurance that dividends will be sufficient to meet
any or all expenses of the Trust. If the balances in the Income and Capital
Accounts are insufficient to provide for amounts payable by the Trust, the
Trustee has the power to sell Securities to pay such amounts. These sales may
result in capital gains or losses to Unitholders. See "Federal Tax Status."
LEGAL OPINIONS
The legality of the Units offered hereby and certain matters relating to federal
tax law have been passed upon by Chapman and Cutler, 111 West Monroe Street,
Chicago, Illinois 60603, as counsel for the Sponsor.
INDEPENDENT AUDITORS
The statements of net assets, including the Trust portfolio, of the Trust at the
Initial 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.
29
REPORT OF ALLEN, GIBBS & HOULIK, L.C.
INDEPENDENT AUDITORS
UNITHOLDERS
RANSON UNIT INVESTMENT TRUST, SERIES 74
We have audited the accompanying statements of net assets, including the Trust
portfolio, of Ranson Unit Investment Trusts, Series 74, as of the opening of
business on January 14, 1999, the Initial Date of Deposit. The statements of
net assets are the responsibility of the Sponsor. Our responsibility is to
express an opinion on the statements of net assets based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statements of net assets are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements of net assets. Our procedures
included confirmation of a letter of credit deposited to purchase Securities by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall statements of net assets presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statements of net assets referred to above present fairly,
in all material respects, the financial position of Ranson Unit Investment
Trusts, Series 74 as of January 14, 1999, in conformity with generally accepted
accounting principles.
ALLEN, GIBBS & HOULIK, L.C.
Wichita, Kansas
January 14, 1999
30
RANSON UNIT INVESTMENT TRUSTS, SERIES 74
STATEMENTS OF NET ASSETS
AT THE OPENING OF BUSINESS ON JANUARY 14, 1999, THE INITIAL DATE OF DEPOSIT
TRUST PROPERTY
Contracts to purchase Securities (1) (2)
-------------
Total
=============
Number of Units
=============
LIABILITY AND INTEREST OF UNITHOLDERS
Liability-
Organizational costs (3)
-------------
Interest of Unitholders-
Cost to investors (4)
-------------
Less: Gross underwriting commission and organizational costs (4)
-------------
Net interest to Unitholders (1) (2) (4)
-------------
Total
=============
- --------------------
<FN>
(1) Aggregate cost of the Securities is based on the closing sale price
evaluations as determined by the Trustee.
(2) An irrevocable letter of credit issued by Intrust Bank, N.A., Wichita,
Kansas has been deposited with the Trustee covering the funds (aggregating
$_______) necessary for the purchase of the Securities in the Trust
represented by purchase contracts.
(3) A portion of the Public Offering Price represents an amount sufficient
to pay for all or a portion of the costs incurred in establishing the Trust.
The amount of these costs are set forth in the "Fee Table." A distribution
will be made as of the close of the initial offering period to an account
maintained by the Trustee from which this obligation of the investors will
be satisfied.
(4) The aggregate cost to investors includes the applicable sales charge
assuming no reduction of sales charges for quantity purchases.
</FN>
31
RANSON UNIT INVESTMENT TRUSTS, SERIES 74
PORTFOLIO AS OF JANUARY 14, 1999
VALUE LINE #1 STRATEGY TRUST, SERIES 1 (JANUARY 1999 SERIES)
Aggregate Annualized
Name of Issuer Number Costs of Current
of Securities Deposited of Price per Securities Dividend
Symbol or Contracted For (1) Shares Share to Trust (2) per Share (3)
- ------ ----------------------- ------ --------- ------------ -------------
32
NOTES TO PORTFOLIO
(1) All or a portion of the Securities may have been deposited in the Trust.
Any undelivered Securities are represented by "regular way" contracts for
thE performance of which an irrevocable letter of credit has been deposited
with the Trustee. At the Initial Date of Deposit, the Sponsor has assigned
to the Trustee all of its rights, title and interest in and to such
undelivered Securities. Contracts to purchase Securities were entered
into on January 13, 1999 and all have an expected settlement date of
January 18, 1999 (see "The Fund").
(2) The market value of each Security is based on the closing sale price on
a national securities exchange if the Security is listed thereon or, if not
so listed, then on the over-the-counter market, in each case, on the day
prior to the Initial Date of Deposit. As of the Initial Date of Deposit
other information regarding the Securities in the Trust is as follows:
Cost to Profit (loss)
Sponsor to Sponsor
--------- -------------
$_______ $_____
(3) The Annualized Current Dividend per Share for each Security was
calculated by annualizing the latest quarterly or semi-annual common stock
dividend declaration on that Security. There can be no assurance that the
future dividend payments, if any, will be maintained in an amount equal to
the dividend listed above.
33
CONTENTS PAGE
- -------- ----
SUMMARY 2
THE FUND 5
THE TRUST PORTFOLIO 6
RISK FACTORS 8
FEDERAL TAX STATUS 10
PUBLIC OFFERING OF UNITS 14
MARKET FOR UNITS 18
REDEMPTION 18
ROLLOVER IN NEW TRUSTS 21
RETIREMENT PLANS 22
UNITHOLDERS 23
INVESTMENT SUPERVISION 25
ADMINISTRATION OF THE TRUST 26
EXPENSES OF THE TRUST 28
LEGAL OPINIONS 29
INDEPENDENT AUDITORS 29
REPORT OF INDEPENDENT AUDITORS 30
STATEMENTS OF NET ASSETS 31
PORTFOLIO 32
NOTES TO PORTFOLIO 33
--------------------
When Units of the Trust are no longer available, or for investors who will
reinvest into subsequent series of the Trust, this Prospectus may be used as a
preliminary prospectus for a future series; in which case investors should note
the following:
Information contained herein is subject to completion or amendment. A
registration statement relating to securities of a future series has been filed
with the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. The Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
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.
Ranson & Associates, Inc.
250 N. Rock Road, Suite 150
Wichita, KS 67206-2241
- --------------------
RANSON
UNIT
INVESTMENT
TRUSTS
- --------------------
--------------------
VALUE LINE
#1 STRATEGY
January 1999 Series
--------------------
- ----------------------------------------
PROSPECTUS JANUARY 14, 1999
- ----------------------------------------
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents.
The facing sheet
The Prospectus
The Signatures
The following exhibits.
1.1. Trust Agreement (to be filed by amendment).
1.1.1. Standard Terms and Conditions of Trust. Reference is made to
Exhibit 1.1.1 to the Registration Statement on Form S-6 for Ranson
Unit Investment Trusts, Series 53 (File No. 333-17811) as filed on
January 7, 1997.
2.1. Form of Certificate of Ownership (pages three and four of the Standard
Terms and Conditions of Trust included as Exhibit 1.1.1).
3.1. Opinion of counsel to the Sponsor as to legality of the securities
being registered including a consent to the use of its name under
"Legal Opinions" in the Prospectus (to be filed by amendment).
3.2. Opinion of counsel to the Sponsor as to the tax status of the
securities being registered (to be filed by amendment).
4.1. Consent of Independent Auditors (to be filed by amendment).
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Ranson Unit Investment Trusts, Series 74, 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 18th day of
December, 1998.
Ranson Unit Investment Trusts,
Series 74, Registrant
By: Ranson & Associates, Inc., Depositor
By: Alex R. Meitzner
--------------------------------------
Alex R. Meitzner
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on December 18, 1998 by the
following persons, who constitute a majority of the Board of Directors of Ranson
& Associates, Inc.
Signature Title
- ------------------ ------------------------------
Douglas K. Rogers Executive Vice )
- ------------------ President and Director )
Douglas K. Rogers
Alex R. Meitzner Chairman of the Board )
- ------------------ of Directors )
Alex R. Meitzner
Robin K. Pinkerton President, Secretary, )
- ------------------ Treasurer and Director ) Alex R. Meitzner
Robin K. Pinkerton ----------------------
Alex R. Meitzner
- --------------------------------------------------------------------------------
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.