File No. 333-24723
CIK #1025203
Securities and Exchange Commission
Washington, D.C. 20549-1004
Amendment No. 2
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: Van Kampen American Capital Equity
Opportunity Trust, Series 57
B. Name of Depositor: Van Kampen American Capital Distributors, Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler Van Kampen American Capital
Distributors, Inc.
Attention: Mark J. Kneedy Attention: Don G. Powell, Chairman
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: An indefinite
number of Units of proportionate interest pursuant to Rule 24f-2
under the Investment Company Act of 1940
F. Proposed maximum offering price to the public of the securities
being registered: Indefinite
G. Amount of registration fee: Not applicable
H. Approximate date of proposed sale to the public:
As Soon As Practicable After the Effective Date of the
Registration Statement
/ / Check box if it is proposed that this filing will become effective
on pursuant to Rule 487.
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.
Van Kampen American Capital Equity Opportunity Trust
Series 57
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of Trust ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) Trust Administration
underwriter
5. Organization of trust ) The Trusts
6. Execution and termination of ) The Trusts
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and
Securities of the Trust
10. General information regarding ) The Trusts
trust's securities and ) Federal Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Trust Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trusts
) Trust Portfolios
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses ) Prospectus Front Cover
Page
) Summary of Essential Financial
) Information
) Trust Portfolios
)
) Trust Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information regarding )
periodic payment plan ) *
certificates )
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
)
) Public Offering
) Rights of Unitholders
(d) Certain other fees, expenses or ) Trust Operating
Expenses
charges payable by holders ) Rights of Unitholders
(e) Certain profits to be received ) Public Offering
by depositor, principal ) Trust Portfolios
underwriter, trustee or any )
affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Rights of Unitholders
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trusts
underlying securities ) Rights of Unitholders
) Trust Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Trust Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions ) *
(c) Reserves or special funds ) Trust Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Trust Administration
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolios
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. Organization, Personnel and Affiliated
Persons of Depositor
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities ) Public Offering
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Operating Expenses
) Public Offering
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) *
to certain persons )
46. (a) Redemption valuation ) Rights of Unitholders
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Trust Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's ) Cover Page
securities ) Trust Operating Expenses
52. (a) Provisions of trust agreement )
with respect to replacement ) Trust Administration
or elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying ) Trust Administration
securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Federal Taxation
VII. Financial and Statistical Information
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements (Instructions) Report of Independent
1(c) to Form S-6) Certified Public
) Accountants
) Statements of Condition
______________________________________________
* Inapplicable, omitted, answer negative or not required
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities 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. This 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.
Preliminary Prospectus Dated May 29, 1997
Subject To Completion
________________, 1997
VAN KAMPEN AMERICAN CAPITAL
Van Kampen American Capital Equity Opportunity Trust, Series 57
Strategic Picks Opportunity Trust, June 1997 Series
Strategic Picks Opportunity Trust-Combined Series, June 1997
The Fund. Van Kampen American Capital Equity Opportunity Trust, Series 57 (the
"Fund") is comprised of two underlying, separate unit investment
trusts designated as Strategic Picks Opportunity Trust, June 1997 Series (the
"Strategic Picks Trust") and the Strategic Picks Opportunity
Trust-Combined Series, June 1997 (the "Strategic Picks Combined Trust")
(collectively, the "Trusts"). The Trusts offer investors the
opportunity to purchase Units representing proportionate interests in a fixed,
diversified portfolio of actively traded equity securities. The Strategic
Picks Trust consists of ten common stocks selected from a pre-screened subset
of the Morgan Stanley Capital International USA Index (the "Strategic
Picks Subset") with the highest dividend yields as of the close of
business three business days prior to the Initial Date of Deposit. The Morgan
Stanley Capital International USA Index (the "MSCI USA Index") is the
property of Morgan Stanley Capital International ("MCSI"). MSCI has
granted a license for use by the Trusts of the MSCI USA Index and related
trademarks and tradenames. The Strategic Picks Combined Trust consists of
twenty common stocks comprised of the ten stocks in the Strategic Picks Trust
and the ten highest dividend yielding stocks in the Dow Jones Industrial
Average (the "DJIA") as of the close of business three business days
prior to the Initial Date of Deposit. The DJIA is the property of Dow Jones &
Company, Inc. Dow Jones & Company, Inc. has not granted to the Strategic Picks
Combined Trust or the Sponsor a license to use the DJIA. Dow Jones & Company,
Inc. has not participated in any way in the creation of such Trust or in the
selection of the stocks included in such Trust and has not approved any
information herein relating thereto. Units are not designed so that their
prices will parallel or correlate with any movements in the DJIA, and it is
expected that their prices will not parallel or correlate with such movements.
The common stocks included in the Trusts are referred to herein as the
"Equity Securities" or "Securities". Unless terminated earlier, the
Trusts will terminate on ____________, 1998 and any Securities then held will,
within a reasonable time thereafter, be liquidated or distributed by the
Trustee. Any Securities liquidated at termination will be sold at the then
current market value for such Securities; therefore, the amount distributable
in cash to a Unitholder upon termination may be more or less than the amount
such Unitholder paid for his Units. Upon liquidation, Unitholders may choose
to reinvest their proceeds into the next Series of the Trusts, if available,
at a reduced sales charge, to receive a cash distribution or to receive a pro
rata distribution of the Securities then included in the Trusts (if they own
the requisite number of Units).
Attention Foreign Investors. If you are not a United States citizen or
resident, distributions from a Trust will generally be subject to U.S. federal
withholding taxes; however, under certain circumstances treaties between the
United States and other countries may reduce or eliminate such withholding
tax. See "Federal Taxation." Such investors should consult their tax
advisers regarding the imposition of U.S. withholding on distributions.
Units of the Trusts are not insured by the FDIC, are not deposits or other
obligations of, or guaranteed by, any depository institution or any government
agency and are subject to investment risk, including possible loss of the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Objectives of the Trusts. The objective of the Strategic Picks Trust is to
provide an above average total return through a combination of potential
capital appreciation and dividend income, consistent with the preservation of
invested capital, by investing in a portfolio of ten actively traded equity
securities having the highest dividend yield in the Strategic Picks Subset as
of the close of business three business days prior to the Initial Date of
Deposit. The objective of the Strategic Picks Combined Trust is to provide an
above average total return through a combination of potential capital
appreciation and dividend income, consistent with the preservation of invested
capital, by investing in a portfolio of twenty actively traded equity
securities comprised of the ten stocks in the Strategic Picks Trust and the
ten common stocks having the highest dividend yield in the DJIA as of the
close of business three business days prior to the Initial Date of Deposit.
There is, of course, no guarantee that the objectives of the Trusts will be
achieved.
Public Offering Price. The Public Offering Price of the Units of each Trust
during the initial offering period and for secondary market transactions after
the initial offering period includes the aggregate underlying value of the
Securities in such Trust's portfolio, the initial sales charge described
below, and cash, if any, in the Income and Capital Accounts held or owned by
such Trust. The initial sales charge is equal to the difference between the
maximum total sales charge of 2.75% of the Public Offering Price and the
maximum deferred sales charge ($0.175 per Unit). The monthly deferred sales
charge ($0.0175 per Unit) will begin accruing on a daily basis on __________
1997 and will continue to accrue through ____________, 1998. The monthly
deferred sales charge will be charged to the Trusts, in arrears, commencing
____________, 1997 and will be charged on the __th day of each month
thereafter through ____________, 1998. Unitholders will be assessed only that
portion of the deferred sales charge that has accrued from the time they
became Unitholders of record. Units purchased subsequent to the initial
deferred sales charge payment will be subject only to that portion of the
deferred sales charge payments not yet collected. This deferred sales charge
will be paid from funds in the Capital Account, if sufficient, or from the
periodic sale of Securities. The total maximum sales charge assessed to
Unitholders on a per Unit basis will be 2.75% of the Public Offering Price
(2.828% of the aggregate value of the Securities less the deferred sales
charge), subject to reduction as set forth in "Public
Offering--General". During the initial offering period, the sales charge
is reduced on a graduated scale for sales involving at least 5,000 Units of a
Trust. If Units were available for purchase at the close of business on the
day before the Initial Date of Deposit, the Public Offering Price per Unit
would have been that amount set forth under "Summary of Essential
Financial Information". Except as provided in "Public Offering--Unit
Distribution", the minimum purchase is 100 Units. See "Public
Offering".
Additional Deposits. The Sponsor may, from time to time after the Initial Date
of Deposit, deposit additional Securities in the Trusts as provided under "
The Trusts".
Dividend and Capital Distributions. Distributions of dividends and capital, if
any, received by a Trust will be reinvested into additional Units, if then
available, on the Distribution Date to Unitholders of record on the record
date as set forth in the "Summary of Essential Financial Information".
Unitholders may also elect to receive cash distributions as provided under
"Rights of Unitholders--Reinvestment Option." The estimated initial
distribution for the Trusts will be that amount set forth under "Summary
of Essential Information--Estimated Initial Distribution" and will be made
on _______ 25, 1997 to Unitholders of record on ________ 10, 1997. Gross
dividends received by the Trusts will be distributed to Unitholders. Expenses
of the Trusts will be paid with proceeds from the sale of Securities. For the
consequences of such sales, see "Federal Taxation". Additionally, upon
surrender of Units for redemption or termination of a Trust, the Trustee will
distribute to each Unitholder his pro rata share of such Trust's assets, less
expenses, in the manner set forth under "Rights of
Unitholders--Distributions of Income and Capital".
Secondary Market For Units. Although not obligated to do so, the Sponsor
currently intends to maintain a market for Units through _______, 1998 and
offer to repurchase such Units at prices which are based on the aggregate
underlying value of Equity Securities (generally determined by the closing
sale or bid prices of the Securities) plus or minus cash, if any, in the
Capital and Income Accounts of a Trust. If a secondary market is not
maintained, a Unitholder may redeem Units at prices based upon the aggregate
underlying value of the Equity Securities plus or minus a pro rata share of
cash, if any, in the Capital and Income Accounts of a Trust. See "Rights
of Unitholders--Redemption of Units". Units sold or tendered for
redemption prior to such time as the entire deferred sales charge on such
Units has been collected will be assessed the amount of the remaining deferred
sales charge at the time of sale or redemption. A Unitholder tendering 1,000
or more Units for redemption may request a distribution of shares of
Securities (reduced by customary transfer and registration charges) in lieu of
payment in cash. See "Rights of Unitholders--Redemption of Units".
Termination. The Trusts will terminate approximately thirteen months after the
Initial Date of Deposit regardless of market conditions at that time.
Commencing on the Mandatory Termination Date, Securities will begin to be sold
in connection with the termination of the Trusts. The Sponsor will determine
the manner, timing and execution of the sale of the Securities. Written notice
of any termination of a Trust shall be given by the Trustee to each Unitholder
at his address appearing on the registration books of the Trust maintained by
the Trustee. At least 30 days prior to the Mandatory Termination Date the
Trustee will provide written notice thereof to all Unitholders and will
include with such notice a form to enable Unitholders to elect a distribution
of shares of the Securities (reduced by customary transfer and registration
charges) if such Unitholder owns at least 1,000 Units, rather than to receive
payment in cash for such Unitholder's pro rata share of the amounts realized
upon the disposition of such Securities. Unitholders will receive cash in lieu
of any fractional shares. To be effective, the election form, and any other
documentation required by the Trustee, must be returned to the Trustee at
least ten business days prior to the Mandatory Termination Date. Unitholders
may elect to become Rollover Unitholders as described in "Special
Redemption and Rollover in New Trusts" below. Rollover Unitholders will
not receive the final liquidation distribution but will receive units of a new
Series of the Trusts, if one is being offered. Unitholders not electing the
Rollover Option or a distribution of shares of Securities will receive a cash
distribution from the sale of the remaining Securities within a reasonable
time after the Trust is terminated. See "Trust Administration--Amendment
or Termination".
Reinvestment Option. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase Units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales
charge to the extent stated in the related prospectus (which may be deferred
in certain cases).
Unitholders will initially have distributions reinvested into additional Units
of the Trusts subject only to the remaining deferred sales charge payments as
set forth herein, if Units are available at the time of reinvestment, or upon
request, either reinvested into an open-end management investment company as
described herein or distributed in cash. See "Rights of
Unitholders--Reinvestment Option".
Special Redemption and Rollover in New Trusts. Unitholders will have the
option, subject to any necessary regulatory approval, of specifying by the
Rollover Notification Date stated in "Summary of Essential Financial
Information" to have all of their Units redeemed and the distributed
Securities sold by the Trustee, in its capacity as Distribution Agent, on the
Special Redemption Date. (Unitholders so electing are referred to herein as
"Rollover Unitholders".) The Distribution Agent will appoint the
Sponsor as its agent to determine the manner, timing and execution of sales of
underlying Securities. The proceeds of the redemption will then be invested in
units of a new Series of the Trusts (the "1998 Trust"), if one is
offered, at a reduced sales charge (anticipated to be 1.75% of the Public
Offering Price of the 1998 Trust). The Sponsor may, however, stop offering
units of the 1998 Trust at any time in its sole discretion without regard to
whether all the proceeds to be invested have been invested. Cash which has not
been invested on behalf of the Rollover Unitholders in the 1998 Trust will be
distributed shortly after the Special Redemption Date. However, the Sponsor
anticipates that sufficient Units will be available, although moneys in these
Trusts may not be fully invested on the next business day. The 1998 Trust is
expected to contain two portfolios of common stocks selected in accordance
with the investment strategies of the current Trusts. Rollover Unitholders
will receive the amount of dividends in the Income Account of the Trusts which
will be included in the reinvestment in units of the 1998 Trust.
Risk Factors. An investment in the Trusts should be made with an understanding
of the risks associated therewith, including the possible deterioration of
either the financial condition of the issuers, the general condition of the
stock market and stock price volatility. For certain risk considerations
related to the Trusts, see "Risk Factors".
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 57
Summary of Essential Financial Information
At the close of business on the day before the Initial Date of Deposit: ____________, 1997
Sponsor: Van Kampen American Capital Distributors, Inc.
Supervisor: Van Kampen American Capital Investment Advisory Corp.
(An affiliate of the Sponsor)
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
Strategic Picks Strategic Picks
Trust Combined Trust
---------------- -------------------
<S> <C> <C>
GENERAL INFORMATION
Number of Units <F1>...........................................................
Fractional Undivided Interest in the Trust per Unit <F1>....................... 1/ 1/
Public Offering Price:
Aggregate Value of Securities in Portfolio <F2>...............................$ $
Aggregate Value of Securities per Unit........................................$ $
Maximum Sales Charge <F3>.....................................................$ $
Less Deferred Sales Charge per Unit...........................................$ $
Public Offering Price per Unit <F3><F4>.......................................$ $
Redemption Price per Unit <F5>................................................$ $
Initial Secondary Market Repurchase Price per Unit <F5>........................$ $
Excess of Public Offering Price per Unit over Redemption Price per Unit <F5>...$ $
Estimated Initial Distribution per Unit........................................$ $
Estimated Annual Dividends per Unit<F6>........................................$ $
Estimated Annual Organizational Expenses per Unit <F7>.........................$ $
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee ............Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee...............Maximum of $.0025 per Unit
Rollover Notification Date .....................
Special Redemption Date.........................
Mandatory Termination Date .....................
Each Trust may be terminated if the net asset value of such Trust is less than
$500,000 unless the net asset value of such Trust's deposits have exceeded
$15,000,000, then the Trust Agreement may be terminated if the net asset value of
Minimum Termination Value.......................such Trust is less than $3,000,000.
Trustee's Annual Fee ...........................$.008 per Unit
Income and Capital Account Record Dates.........
Income and Capital Account Distribution Dates...
Evaluation Time.................................4:00 P.M. New York time
- ----------
<FN>
<F1>As of the close of business on any day on which the Sponsor is the sole
Unitholder of a Trust, the number of Units may be adjusted so that the Public
Offering Price per Unit will equal approximately $10. Therefore, to the extent
of any such adjustment the fractional undivided interest per Unit will
increase or decrease from the amount indicated above.
<F2>Each Security listed on a national securities exchange is valued at the
closing sale price or if the Security is not so listed, at the asked price
thereof.
<F3>The Maximum Sales Charge consists of an initial sales charge and a deferred
sales charge. The initial sales charge is applicable to all Units and
represents an amount equal to the difference between the Maximum Sales Charge
of 2.75% of the Public Offering Price and the amount of the maximum deferred
sales charge of $0.175 per Unit. Subsequent to the Initial Date of Deposit,
the amount of the initial sales charge will vary with changes in the aggregate
value of the Securities in a Trust. In addition to the initial sales charge,
Unitholders will pay a deferred sales charge of $0.0175 per Unit per month
which will begin accruing on a daily basis on _______, 1997 and will continue
to accrue through _______, 1998. The monthly deferred sales charge will be
charged to the Trusts, in arrears, commencing _______, 1997 and will be
charged on the __th day of each month thereafter through _______, 1998. Units
purchased subsequent to the initial deferred sales charge payment will be
subject only to that portion of the deferred sales charge payments not yet
collected. These deferred sales charge payments will be paid from funds in the
Capital Account, if sufficient, or from the periodic sale of Securities. The
total maximum sales charge will be 2.75% of the Public Offering Price (2.828%
of the aggregate value of the Securities less the deferred sales charge). See
the "Fee Table" below and "Public Offering--Offering Price".
<F4>On the Initial Date of Deposit there will be no cash in the Income or Capital
Accounts. Anyone ordering Units after such date will have included in the
Public Offering Price a pro rata share of any cash in such Accounts.
<F5>The Redemption Price per Unit and the Initial Secondary Market Repurchase
Price per Unit are reduced by the unpaid portion of the deferred sales charge.
<F6>Estimated annual dividends are based on the most recently declared dividends.
Estimated Annual Dividends per Unit are based on the number of Units, the
fractional undivided interest in the Securities per Unit and the aggregate
value of the Securities per Unit as of the Initial Date of Deposit. Investors
should note that the actual annual dividends received per Unit will vary from
the estimated amount due to changes in the factors described in the preceding
sentence and actual dividends declared and paid by the issuers of the
Securities.
<F7>Each Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration statement,
the trust indenture and other closing documents, registering Units with the
Securities and Exchange Commission and states, the initial audit of the Trust
portfolio and the initial fees and expenses of the Trustee but not including
the expenses incurred in the preparation and printing of brochures and other
advertising materials and any other selling expenses) as is common for mutual
funds. Total organizational expenses will be amortized over the life of each
Trust and paid from funds in the Capital Account, if sufficient, or from the
sale of Securities. See "Trust Operating Expenses" and "Statements
of Condition". Historically, the sponsors of unit investment trusts have
paid all of the costs of establishing such trusts. Estimated Annual
Organizational Expenses per Unit have been estimated based on a projected
trust size of $_______ and $_______ for the Strategic Picks and Strategic
Picks Combined Trusts, respectively. To the extent a Trust is larger or
smaller, the actual organizational expenses paid by such Trust (and therefore
by Unitholders) will vary from the estimated amount set forth above.
</TABLE>
FEE TABLE
This Fee Table is intended to assist investors in understanding the costs
and expenses that an investor will bear directly or indirectly. See
"Public Offering--Offering Price" and "Trust Operating Expenses". Although
each Trust has a term of approximately thirteen months, and is a unit
investment trust rather than a mutual fund, this information is presented to
permit a comparison of fees. The examples below assume that the principal
amount of and distributions on an investment are rolled over each year into
a new Series of the Trusts subject only to the anticipated reduced sales
charge applicable to Rollover Unitholders. See "Right of Unitholders--
Special Redemption and Rollover in New Trusts." Investors should note that
while these examples are based on the public offering price and the
estimated fees for the current Trusts, the actual public offering price
and fees for any new Series of the Trusts created in the future periods
indicated could vary from those of the current Trusts.
Strategic Picks Trust
<TABLE>
<CAPTION>
Amount Per
Unitholder Transaction Expenses (as of the Initial Date of Deposit) (as a percentage of offering price) 100 Units
--------- ---------------
<S> <C> <C>
Initial Sales Charge Imposed on Purchase <F1>........................................................... 1.00% $ 10.00
Deferred Sales Charge <F2>.............................................................................. 1.75% 17.50
--------- ---------------
Maximum Sales Charge.................................................................................... 2.75% $ 27.50
========= ===============
Maximum Sales Charge Imposed on Reinvested Dividends <F3>............................................... 1.75% $ 17.50
========= ===============
Estimated Annual Trust Operating Expenses (as of the Initial Date of Deposit) (as a percentage of
aggregate value)
Trustee's Fee .......................................................................................... $
Portfolio Supervision and Evaluation Fees ..............................................................
Organizational Costs....................................................................................
Other Operating Expenses ...............................................................................
--------- ---------------
Total .................................................................................................. $
========= ===============
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for
Period of:
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period $ $ N/A N/A
</TABLE>
Strategic Picks Combined Trust
<TABLE>
<CAPTION>
Amount Per
Unitholder Transaction Expenses (as of the Initial Date of Deposit) (as a percentage of offering price) 100 Units
--------- ---------------
<S> <C> <C>
Initial Sales Charge Imposed on Purchase <F1>........................................................... 1.00% $ 10.00
Deferred Sales Charge <F2>.............................................................................. 1.75% 17.50
--------- ---------------
Maximum Sales Charge.................................................................................... 2.75% $ 27.50
========= ===============
Maximum Sales Charge Imposed on Reinvested Dividends <F3>............................................... 1.75% $ 17.50
========= ===============
Estimated Annual Trust Operating Expenses (as of the Initial Date of Deposit) (as a percentage of
aggregate value)
Trustee's Fee .......................................................................................... $
Portfolio Supervision and Evaluation Fees ..............................................................
Organizational Costs....................................................................................
Other Operating Expenses ...............................................................................
--------- ---------------
Total .................................................................................................. $
========= ===============
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for
Period of:
---------------------------------------------
1 Year 3 Years 5 Years 10 Years
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment,
assuming a 5% annual return and redemption at the end of each time period $ $ N/A N/A
</TABLE>
The examples assume reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. For purposes of the
examples, the deferred sales charge imposed on reinvestment of dividends is
not reflected until the year following payment of the dividend; the cumulative
expenses would be higher if sales charges on reinvested dividends were
reflected in the year of reinvestment. The examples should not be considered
representations 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 examples.
- ----------
The Initial Sales Charge is actually the difference between Maximum Sales
Charge (2.75% of the Public Offering Price) and the maximum deferred sales
charge ($1.75 per Unit) and would exceed 1.00% if the Public Offering Price
exceeds $10 per Unit.
The actual fee is $0.0175 per Unit per month, irrespective of purchase or
redemption price, deducted over the 10 months commencing ________, 1997. If a
holder sells or redeems Units before all of these deductions have been made,
the balance of the deferred sales charge payments remaining will be deducted
from the sales or redemption proceeds. If Unit price exceeds $10 per Unit, the
deferred portion of the sales charge will be less than 1.75%; if Unit price is
less than $10 per Unit, the deferred portion of the sales charge will exceed
1.75%. Units purchased subsequent to the initial deferred sales charge payment
will be subject to only that portion of the deferred sales charge payments not
yet collected.
Reinvested dividends will be subject only to the deferred sales charge
remaining at the time of reinvestment. See "Rights of
Unitholders--Reinvestment Option".
THE TRUSTS
- --------------------------------------------------------------------------
Van Kampen American Capital Equity Opportunity Trust, Series 57 is comprised
of two separate unit investment trusts: Strategic Picks Opportunity Trust,
June 1997 Series and Strategic Picks Opportunity Trust- Combined Series, June
1997. The Fund was created under the laws of the State of New York pursuant to
a Trust Indenture and Trust Agreement (the "Trust Agreement"), dated
the date of this Prospectus (the "Initial Date of Deposit"), among Van
Kampen American Capital Distributors, Inc., as Sponsor, Van Kampen American
Capital Investment Advisory Corp., as Supervisor, The Bank of New York, as
Trustee, and American Portfolio Evaluation Services, a division of Van Kampen
American Capital Investment Advisory Corp., as Evaluator.
The Strategic Picks Trust offers investors the opportunity to purchase Units
representing proportionate interests in a portfolio of actively traded equity
securities consisting of ten common stocks selected from the Strategic Picks
Subset with the highest dividend yields as of the close of business three
business days prior to the Initial Date of Deposit. The Strategic Picks
Combined Trust offers investors the opportunity to purchase Units representing
proportionate interests in a portfolio of actively traded equity securities of
twenty common stocks comprised of the ten stocks in the Strategic Picks Trust
and the ten highest dividend yielding stocks in the DJIA as of the close of
business three business days prior to the Initial Date of Deposit. See
"Trust Portfolios." These yields are historical and there is no assurance
that any dividends will be declared or paid in the future on the Securities in
the Trusts. The Trusts may be an appropriate medium for investors who desire
to participate in a portfolio of common stocks with greater diversification
than they might be able to acquire individually. Diversification of assets in
a Trust will not eliminate the risk of loss always inherent in the ownership
of securities.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Portfolios" herein, including delivery
statements relating to contracts for the purchase of certain such Securities
and an irrevocable letter of credit issued by a financial institution in the
amount required for such purchases. Thereafter, the Trustee, in exchange for
such Securities (and contracts) so deposited, delivered to the Sponsor
documentation evidencing the ownership of that number of Units indicated in
"Summary of Essential Financial Information". Unless terminated
earlier, the Trusts will terminate on the Mandatory Termination Date set forth
under "Summary of Essential Financial Information" and any Securities
then held will, within a reasonable time thereafter, be liquidated or
distributed by the Trustee. Any Securities liquidated at termination will be
sold at the then current market value for such Securities; therefore, the
amount distributable in cash to a Unitholder upon termination may be more or
less than the amount such Unitholder paid for his Units. Upon liquidation,
Unitholders may choose either to reinvest their proceeds into a subsequent
Series of the Trusts, if available, at a reduced sales charge, to receive a
pro rata distribution of the Securities then included in the Trusts (if they
own the requisite minimum number of Units) or to receive a cash distribution.
Additional Units of the Trusts may be issued at any time by depositing in the
Trusts (i) additional Securities, (ii) contracts to purchase securities
together with cash or irrevocable letters of credit or (iii) cash (including a
letter of credit) with instructions to purchase additional Securities. As
additional Units are issued by the Trusts as a result of the deposit of
additional Securities, the aggregate value of the Securities in the Trusts
will be increased and the fractional undivided interest in the Trusts
represented by each Unit will be decreased. The Sponsor may continue to make
additional deposits of Securities or cash with instructions to purchase
Securities into the Trusts following the Initial Date of Deposit, provided
that such additional deposits will be in amounts which will maintain, as
nearly as practicable, the same percentage relationship among the number of
shares of each Equity Security in the related Trust's portfolio that existed
immediately prior to any such subsequent deposit. Any deposit of additional
Equity Securities will duplicate, as nearly as is practicable, this actual
proportionate relationship and not the original proportionate relationship on
the Initial Date of Deposit, since the actual proportionate relationship may
be different than the original proportionate relationship. Any such difference
may be due to the sale, redemption or liquidation of any of the Equity
Securities deposited in a Trust on the Initial, or any subsequent, Date of
Deposit. If the Sponsor deposits cash, however, 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 Trusts will pay the associated brokerage fees.
Each Unit initially offered represents an undivided interest in the related
Trust. To the extent that any Units are redeemed by the Trustee or additional
Units are issued as a result of additional Securities being deposited by the
Sponsor, the fractional undivided interest in a Trust represented by each
unredeemed Unit will increase or decrease accordingly, although the actual
interest in such Trust represented by such fraction will remain unchanged.
Units will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor, or until the termination of the
Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
- --------------------------------------------------------------------------
The objective of each Trust is to provide an above average total return
through a combination of potential capital appreciation and dividend income,
consistent with the preservation of invested capital, by investing in a
portfolio which contains common stocks selected through the following
processes.
The portfolio of the Strategic Picks Trust is selected by implementing the
following investment strategy. Beginning with the MSCI USA Index, all stocks
of companies in the financial or utility sectors and stocks included in the
Dow Jones Industrial Average are removed. This pool of stocks is screened for
only those companies that have positive one- and three-year sales and earnings
growth rates and two years positive dividend growth. The remaining stocks are
ranked highest to lowest by annual trading volume and only the top 75% are
retained. The remaining stocks, which then comprise the "Strategic Picks
Subset," are ranked by dividend yield and the ten highest-yielding stocks
are selected for the Strategic Picks Trust portfolio.
The portfolio of the Strategic Picks Combined Trust is selected by combining
the ten common stocks in the Strategic Picks Trust with the ten highest
dividend yielding common stocks in the Dow Jones Industrial Average as of the
close of business three business days prior to the Initial Date of Deposit.
Accordingly, the Strategic Picks Combined Trust consists of twenty stocks
which represent a combined portfolio of stocks selected through the Strategic
Picks investment strategy and the "Dogs of the Dow" investment
strategy.
The MSCI USA Index consists of approximately 370 large domestic companies in
the United States and has existed since January 1, 1970. Dividend yield is
calculated for each Security by annualizing the last quarterly or semi-annual
ordinary dividend declared on the Security and dividing the result by its
closing sale price three business days prior to the Initial Date of Deposit.
This yield is historical and there is no assurance that any dividends will be
declared or paid in the future on the Securities.
Investing in indexes represents a popular way to try to capture the broad
movement of a single market. By refining an index, it may be possible to
outperform the general market. The Strategic Picks Trust utilizes a simple
strategy: Refine an index of domestic blue chip stocks (the MSCI USA Index),
remove those that don't meet specific quality tests, pick the most liquid
stocks, and choose the ten stocks with the highest dividend yield for the
portfolio. This strategy seeks to identify industrial companies that
demonstrate the following traits: high quality, potentially undervalued stock
price and historically high dividends.
Morgan Stanley Capital International. Recognized as a world leader in global
financial research, Morgan Stanley monitors more than 4,000 companies in 43
countries, representing 80% of the total market value of the world's stock
markets. The Morgan Stanley Capital International ("MSCI") databases
are used as a benchmark by more than 90% of the investment community. With
hundreds of analysts located across the globe, Morgan Stanley provides
comprehensive research and in-depth knowledge about general markets and
specific companies around the world.
Since 1968, MSCI global indices have presented an array of investment
opportunities available to the international investor, including indices such
as the MSCI USA Index and the MSCI Europe, Australasia and Far East Index
(EAFE). These indices seek to represent an accurate normal portfolio. In
addition, index valuation ratios and company-level fundamental data provide
tools for the international investor. MSCI believes that local stock exchange
indices are not comparable with one another due to differences in the
representation of the local market, mathematical formulas, methods of
adjusting for capital changes, and base dates. The same criteria and
calculation methodology are applied across all MSCI indices. Further, while
accounting standards continue to differ according to local customs and
practices, fundamental data is analyzed and presented in a uniform and
meaningful manner in MSCI indices--allowing investors to compare investment
opportunities across markets. Each MSCI country index is constructed so as to
minimize double counting, assuring that all industry groups are
proportionately represented, and that each country's contribution to the
global or regional index is accurately based on its market capitalization.
In 1986, Morgan Stanley acquired the indices and data from Capital
International Perspective, S.A. ("CIPSA") based in Geneva,
Switzerland. CIPSA has been researching and publishing international indices
since 1969 and continues to be solely responsible for the decisions regarding
constituent additions and deletions as well as any other methodological
modifications to the indices. Morgan Stanley contributes its expertise in
technology and the marketing and distribution of the MSCI Indices and
publications. Selection of the constituents for MSCI Indices is conducted
independent of the Sponsor which has no input regarding the components of any
index.
The MSCI Index Methodology. While the MSCI index methodology has evolved to
capture the growth of the investment universe, the index philosophy has never
been compromised to simplify the complicated process of investing: MSCI
indices are based on detailed analysis to make it easier for the investor to
measure international performance. Constituents are selected for a country
index through the following process: (1) Define the "Market" ; (2)
Capture 60% of the market capitalization of the country across all industry
groups; (3) Select the most liquid securities within each industry; (4) Select
stocks with sufficient free float; (5) Avoid cross-ownership; and (6) Apply
full market capitalization weights. In the case of the MSCI USA Index, which
is the foundation for the Strategic Picks Trust investment strategy, these
criteria are applied within the United States market.
The initial research for the MSCI Indices covers the full breadth of the
global equity securities market. Country specialists track the evolution of
both listed and unlisted shares of domestically listed companies in nearly
every country in the world. Based in Geneva, these country teams collect
share, pricing, ownership, float and liquidity data for effectively all
companies worldwide. Sources for this information are local stock exchanges
and brokerage firms, newspapers, and company contacts. From this master
matrix, the total country market capitalization is adjusted for
double-counting and non-domiciled companies. All of the companies within this
research coverage are eligible for inclusion in the MSCI indices except
non-domiciled companies, investment trusts and mutual funds.
Once the total country market capitalization is analyzed, 60% of the
capitalization of each industry group and thus 60% of the entire market is
targeted for each MSCI index. This ensures that the index reflects the
industry characteristics of the overall market, and permits the construction
of accurate regional and global industry indices. Research coverage in MSCI
products and publications extends beyond the index coverage (60%) to capture
80% of the market for each country. This coverage includes daily performance
as well as monthly valuation ratios and summarized financial statement data.
When selecting the constituents of an index, the most effective industry
classification is used--either the local convention or the MSCI schema of 58
industry groups--in order to mirror the industry characteristics of the local
market. Once the selection process is complete, the index constituents are
re-classified into the MSCI schema of 58 industries and 8 economic sectors in
order to facilitate cross-country comparisons. The MSCI classification schema
has been adopted by Reuters for their industry classification. Securities are
selected to represent an industry based on size and the portion of earnings
and revenues attributable to that industry group. Even within an industry the
goal is to represent the full diversity of business segments. An industry
representation may exceed the 60% target because one or two large companies
dominate an industry. Similarly, an industry may fall below the 80% level
under conventional analysis because its companies lack good liquidity and
float, or because of extensive cross-ownership.
A goal of the MSCI index construction process is to select the most liquid
stocks within each industry group, all other things being equal, since
liquidity is necessary but not sole determinant for inclusion in the index.
Liquidity is monitored by monthly average trading value over time in order to
determine normal levels of volume, excluding temporary peaks and troughs. A
stock's liquidity is significant not only in absolute terms, but also relative
to its market capitalization and to average liquidity for the country as a
whole.
Float is monitored for every security in the market, and low float (a small
percentage of shares freely tradable) may exclude a stock from consideration
in the index. But float can be difficult to determine: in some markets good
sources are generally not available; in other markets, information on smaller
and less prominent issues can be subject to error and time lags. Government
ownership and cross-ownership positions can change over time and are not
always made public. Float also tends to be defined differently depending on
the source. Thus, evaluations of float run the risk of penalizing those
markets that have good disclosure, regardless of the actual degree of
availability of shares. As with liquidity, sufficient float is an important
consideration, not an inflexible rule.
Cross-ownership occurs when one company has a significant ownership in another
company in the same country. In situations where cross-ownership is
substantial, including both companies in an index can skew industry weights,
distort country-level valuations (such as country price-earnings and
price-book value ratios) and overstate a country's true market size. An
integral part of the country research function is identifying cross ownerships
in order to avoid or minimize them. Country specialists in Geneva do much of
the cross-ownership identification through researching company reports, local
newspapers and stock exchange data.
All standard MSCI indices are weighted by each company's full market
capitalization (both listed and unlisted shares). This approach has the
significant advantage of objectivity--the number of shares outstanding for a
company is a constituent figure for companies around the world and is easily
agreed upon and obtainable. Full market capitalization weighting is favored to
other weighting schemes for both theoretical and practical reasons: (a) it is
impossible to judge whether a position which is currently in firm hands might
be available in the future; (b) the quality and timeliness of information on
float varies from market to market and adjustments penalize those markets with
the highest standards of disclosure; (c) the most serious consequence of float
limitations is limited liquidity which can be monitored objectively; much
effort is spent in researching and monitoring these factors when selecting
constituents for each country index but once a security is selected, it is
included in the index at its full market value. A growing number of very
sizable companies have been brought or are expected to be brought to the
market with modest initial tranches being publicly available. At the same
time, the obvious relevance of these companies instantly positions them among
the core investment opportunities in their market. In order to allow the MSCI
indices to capture this new market trend, in very exceptional cases, a company
may be included at a portion of its total market capitalization.
General. Investors will be subject to taxation on the dividend income, if any,
received by the Trusts and on gains from the sale or liquidation of
Securities. Investors should be aware that there is not any guarantee that the
objectives of the Trusts will be achieved because it is subject to the
continuing ability of the respective issuers to declare and pay dividends and
because the market value of the Securities can be affected by a variety of
factors. Common stocks may be especially susceptible to general stock market
movements and to volatile increases and decreases of value as market
confidence in and perceptions of the issuers change. Investors should be aware
that there can be no assurance that the value of the underlying Securities
will increase or that the issuers of the Securities will pay dividends on
outstanding common shares. Any distribution of income will generally depend
upon the declaration of dividends by the issuers of the Securities and the
declaration of any dividends depends upon several factors including the
financial condition of the issuers and general economic conditions. See
"Risk Factors".
Investors should be aware that the Trusts are not "managed" funds and
as a result the adverse financial condition of a company will not result in
its elimination from a portfolio except under extraordinary circumstances (see
"Trust Administration--Portfolio Administration"). In addition,
Securities will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Investors should
note in particular that the Securities were selected for inclusion in the
Trusts as of three business days prior to the Initial Date of Deposit.
Subsequent to this time, the Securities may no longer meet the criteria
necessary for inclusion on the Initial Date of Deposit. Should a Security fail
to meet such criteria subsequent to this time, such Security will not as a
result thereof be removed from the portfolio. In addition, since the Sponsor
may deposit additional Equity Securities which were originally selected
through this process, the Sponsor may continue to sell Units of the Trusts
even though the Equity Securities would no longer be chosen for deposit into
the Trusts if the selection process were to be made again at a later time.
Because certain of the Equity Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from such
events will in most cases be distributed to Unitholders and will not be
reinvested, no assurance can be given that a Trust will retain for any length
of time its present size and composition. Although the portfolios are not
managed, the Sponsor may instruct the Trustee to sell Equity Securities under
certain limited circumstances. See "Trust Administration--Portfolio
Administration."
Each Trust consists of (a) the Equity Securities (including contracts for the
purchase thereof) listed under the related "Portfolio" as may continue
to be held from time to time in such Trust, (b) any additional Equity
Securities acquired and held by such 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 Equity Securities. However, should any contract for the purchase
of any of the Equity 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 Equity Securities in
accordance with the Trust Agreement, refund the cash and sales charge
attributable to such failed contract to all Unitholders on or before the next
scheduled distribution date.
TRUST PORTFOLIOS
- --------------------------------------------------------------------------
Strategic Picks Opportunity Trust
The Strategic Picks Opportunity Trust consists of a diversified portfolio of
ten different issues of Securities selected from the pre-screened Strategic
Picks Subset having the highest dividend yield as of the close of business
three business days prior to the Initial Date of Deposit. All of the
Securities are listed on a national securities exchange, the NASDAQ National
Market System or are traded in the over-the-counter market. The following is a
general description of each of the companies that are included in the
Strategic Picks Trust.
[Company descriptions to come.]
The following table sets forth a comparison of the hypothetical total return
of the ten highest yielding common stocks selected in accordance with the
investment strategy utilized by the Strategic Picks Trust (the "Strategy
Stocks") with those of all common stocks comprising the S&P 500, the Dow
Jones Industrial Average and the MSCI USA Index. It should be noted that the
common stocks comprising the Strategy Stocks may not be the same stocks from
year to year and may not be the same common stocks as those included in the
Strategic Picks Trust.
<TABLE>
COMPARISON OF TOTAL RETURNS*
<CAPTION>
Standard & Dow Jones
Poor's 500 Industrial
Strategy Stocks Index Average MSCI USA Index
--------------- --------------- ---------------- ---------------
Total Return Total Return Total Return Total Return
Year <F1> <F1> <F1> <F1>
- -------- --------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
1977 0.32% (7.16) % (12.71) % (7.11) %
1978 13.26 6.39 2.69 6.00
1979 17.00 18.19 10.52 13.86
1980 40.64 31.52 21.41 27.97
1981 5.09 (4.84) (3.40) (3.50)
1982 39.84 20.37 25.79 20.13
1983 17.66 22.31 25.68 21.11
1984 10.89 5.97 1.06 5.71
1985 46.11 31.05 32.78 31.04
1986 34.86 18.54 26.91 17.02
1987 11.38 5.67 6.02 4.41
1988 16.05 16.34 15.95 15.34
1989 31.87 31.21 31.71 30.21
1990 0.52 (3.13) (0.57) (1.89)
1991 47.88 30.00 23.93 30.17
1992 2.26 7.43 7.34 7.06
1993 7.32 9.92 16.72 9.82
1994 9.91 1.28 4.95 2.05
1995 38.10 37.11 36.48 37.04
1996 23.90 22.68 28.57 23.36
* Source: Barron's, Fact Set, Bloomberg, Morgan Stanley Capital International
and The Wall Street Journal. The Sponsor has not independently verified this
data but has no reason to believe that this data is incorrect in any material
respect.
- ----------
<FN>
<F1>The Strategy Stocks for each period were identified by ranking the dividend
yield for each of the stocks in the Strategic Picks Subset by annualizing the
last dividend paid (the last dividend declared was used in cases when the
stock was trading ex-dividend as of the last day of the year) and dividing the
result by the stock's market value on the first day of trading on the New York
Stock Exchange in the period. Total Return for each period was calculated by
taking the difference between period-end prices and prices at the end of the
following period (adjusted for any stock splits and corporate spinoffs) and
adding dividends for the period. If the dividend yield for two companies was
the same in any period, the company with the largest market capitalization was
utilized. Historical total returns thus represent actual stocks and real time;
the results illustrate what an investor would have obtained had the investor
been invested in the related stocks in the periods indicated. Total Return
does not take into consideration any sales charges, commissions, expenses or
taxes that will be incurred by the Strategic Picks Trust or Unitholders.
</TABLE>
Based on the hypothetical total returns set forth in the table above, the
average annual total returns for the Strategy Stocks for the most recent
three, five, ten and twenty year periods was 23.4%, 15.6%, 18.0% and 19.8%,
respectively. Based on the hypothetical total returns set forth in the table
above, the average annual total returns for the S&P 500 for the most recent
three, five, ten and twenty year periods was 19.4%, 15.0%, 15.1% and 14.3%,
respectively. Based on the hypothetical returns set forth in the table above,
the average annual total returns for the DJIA for the most recent three, five,
ten and twenty year periods was 22.6%, 18.2%, 16.5% and 14.3%, respectively.
Based on the hypothetical returns set forth in the table above, the average
annual total returns for the MSCI USA Index for the most recent three, five,
ten and twenty year periods was 19.9%, 15.2%, 15.1% and 13.8%, respectively.
The hypothetical returns shown above represent past performance and are not
guarantees of future performance and should not be used as a predictor of
returns to be expected in connection with the Strategic Picks Trust. Among
other factors, both stock prices (which may appreciate or depreciate) and
dividends (which may be increased, reduced or eliminated) will affect the
returns. Had the portfolio been available over the periods indicated in the
above table, after deductions for expenses and sales charges and not
accounting for taxes, it would have underperformed the S&P 500, the DJIA and
the MSCI USA Index in 8, 8 and 7 of the last 20 years, respectively. There
can be no assurance that the Strategic Picks Trust will outperform the S&P
500, the Dow Jones Industrial Average or the MSCI USA Index over the life of
such Trust or over consecutive rollover periods, if available. A Unitholder
would not necessarily realize as high a total return on an investment in the
stocks upon which the hypothetical returns shown above are based for the
following reasons: the hypothetical total return figures shown above do not
reflect sales charges, commissions Trust expenses or taxes; the Trusts are
established at different times of the year; the Trust may not be able to
invest equally in the Strategy Stocks and may not be fully invested at all
times; and Equity Securities are often purchased or sold at prices different
from the closing prices used in buying and selling Units.
The chart below represents past performance of the Strategy Stocks, S&P 500,
the Dow Jones Industrial Average and the MSCI USA Index (but does not
represent possible performance of the Strategic Picks Trust which, as
indicated above, includes certain expenses and commissions not included in the
chart) and should not be considered indicative of future results. Further,
results are hypothetical. The chart assumes that all dividends during a year
(including those on stocks trading ex-dividend as of the last day of the year)
are reinvested at the end of that year and does not reflect sales charges,
commissions, expenses or income taxes. Based on the foregoing assumptions, the
average annual returns (which represent the percentage return derived by
taking the sum of the initial investment and all appreciation and dividends
for the specified investment period) during the period referred to in the
table were 19.8%, 14.3%, 14.3% and 13.8% for the Strategy Stocks, the S&P 500,
the Dow Jones Industrial Average and the MSCI USA Index, respectively. There
can be no assurance that the Strategic Picks Trust will outperform the S&P
500, the Dow Jones Industrial Average or the MSCI USA Index over its life or
over consecutive rollover periods, if available.
<TABLE>
Value of $10,000 Invested January 1, 1977
<CAPTION>
Standard & Dow Jones MSCI
Strategy Poor's 500 Industrial USA
Period Stocks Index Average Index
- --------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
1977 $ 10,032 $ 9,284 $ 8,730 $ 9,289
1978 11,362 9,877 8,965 9,846
1979 13,294 11,674 9,908 11,211
1980 18,696 15,354 12,029 14,347
1981 19,648 14,610 11,620 13,845
1982 27,476 17,587 14,617 16,632
1983 32,328 21,510 18,366 20,142
1984 35,849 22,794 18,565 21,293
1985 52,378 29,872 24,650 27,902
1986 70,638 35,410 31,286 32,651
1987 78,676 37,418 33,170 34,091
1988 91,304 43,532 38,460 39,320
1989 120,402 57,118 50,656 51,199
1990 121,028 55,331 50,362 50,231
1991 178,977 71,930 62,414 65,386
1992 183,021 77,274 67,001 70,002
1993 196,419 84,940 78,217 76,876
1994 215,884 86,027 82,089 78,452
1995 298,135 117,952 112,043 107,511
1996 369,390 144,703 144,065 132,625
</TABLE>
Strategic Picks Combined Trust
The Strategic Picks Combined Trust consists of a diversified portfolio of
twenty different issues of Securities consisting of the ten stocks in the
Strategic Picks Trust and the ten stocks in the DJIA having the highest
dividend yield as of the close of business three business days prior to the
Initial Date of Deposit. All of the Securities are listed on a national
securities exchange, the NASDAQ National Market System or are traded in the
over-the-counter market. The following is a general description of each of the
companies that are included in the Strategic Picks Combined Trust.
[Company descriptions to come.]
The following table sets forth a comparison of the hypothetical total return
of the ten highest yielding common stocks selected in accordance with the
investment strategy utilized by the Strategic Picks Combined Trust (the "
Strategy Stocks") with those of all common stocks comprising the S&P 500,
the Dow Jones Industrial Average and the MSCI USA Index. It should be noted
that the common stocks comprising the Strategy Stocks may not be the same
stocks from year to year and may not be the same common stocks as those
included in the Strategic Picks Combined Trust.
<TABLE>
COMPARISON OF TOTAL RETURNS*
<CAPTION>
Standard & Dow Jones
Poor's 500 Industrial
Strategy Stocks Index Average MSCI USA Index
---------------- --------------- ---------------- ---------------
Total Return Total Return Total Return Total Return
Year <F1> <F1> <F1> <F1>
- -------- ---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
1977 (0.72)% (7.16) % (12.71) % (7.11) %
1978 6.69 6.39 2.69 6.00
1979 14.69 18.19 10.52 13.86
1980 33.94 31.52 21.41 27.97
1981 6.31 (4.84) (3.40) (3.50)
1982 32.94 20.37 25.79 20.13
1983 28.21 22.31 25.68 21.11
1984 11.36 5.97 1.06 5.71
1985 37.78 31.05 32.78 31.04
1986 35.32 18.54 26.91 17.02
1987 8.66 5.67 6.02 4.41
1988 20.40 16.34 15.95 15.34
1989 28.48 31.21 31.71 30.21
1990 (3.53) (3.13) (0.57) (1.89)
1991 41.37 30.00 23.93 30.17
1992 5.06 7.43 7.34 7.06
1993 17.13 9.92 16.72 9.82
1994 7.02 1.28 4.95 2.05
1995 37.34 37.11 36.48 37.04
1996 25.98 22.68 28.57 23.36
</TABLE>
* Source: Barron's, Fact Set, Bloomberg, Morgan Stanley Capital International
and The Wall Street Journal. The Sponsor has not independently verified this
data but has no reason to believe that this data is incorrect in any material
respect.
- ----------
The Strategy Stocks for each period were identified by separately ranking the
dividend yield for each of the stocks in the Strategic Picks Subset and the
DJIA by annualizing the last dividend paid (the last dividend declared was
used in cases when the stock was trading ex-dividend as of the last day of the
year) and dividing the result by the stock's market value on the first day of
trading on the New York Stock Exchange in the period. Total Return for each
period was calculated by taking the difference between period-end prices and
prices at the end of the following period (adjusted for any stock splits and
corporate spinoffs) and adding dividends for the period. If the dividend yield
for two companies was the same in any period, the company with the largest
market capitalization was utilized. Historical total returns thus represent
actual stocks and real time; the results illustrate what an investor would
have obtained had the investor been invested in the related stocks in the
periods indicated. Total Return does not take into consideration any sales
charges, commissions, expenses or taxes that will be incurred by the Strategic
Picks Combined Trust or Unitholders.
Based on the hypothetical total returns set forth in the table above, the
average annual total returns for the Strategy Stocks for the most recent
three, five, ten and twenty year periods was 22.8%, 17.9%, 18.0% and 18.9%,
respectively. Based on the hypothetical total returns set forth in the table
above, the average annual total returns for the S&P 500 for the most recent
three, five, ten and twenty year periods was 19.4%, 15.0%, 15.1% and 14.3%,
respectively. Based on the hypothetical returns set forth in the table above,
the average annual total returns for the DJIA for the most recent three, five,
ten and twenty year periods was 22.6%, 18.2%, 16.5% and 14.3%, respectively.
Based on the hypothetical returns set forth in the table above, the average
annual total returns for the MSCI USA Index for the most recent three, five,
ten and twenty year periods was 19.9%, 15.2%, 15.1% and 13.8%, respectively.
The hypothetical returns shown above represent past performance and are not
guarantees of future performance and should not be used as a predictor of
returns to be expected in connection with the Strategic Picks Combined Trust.
Among other factors, both stock prices (which may appreciate or depreciate)
and dividends (which may be increased, reduced or eliminated) will affect the
returns. Had the portfolio been available over the periods indicated in the
above table, after deductions for expenses and sales charges and not
accounting for taxes, it would have underperformed the S&P 500, the DJIA and
the MSCI USA Index in 7, 7 and 6 of the last 20 years, respectively. There
can be no assurance that the Strategic Picks Combined Trust will outperform
the S&P 500, the Dow Jones Industrial Average or the MSCI USA Index over the
life of such Trust or over consecutive rollover periods, if available. A
Unitholder would not necessarily realize as high a total return on an
investment in the stocks upon which the hypothetical returns shown above are
based for the following reasons: the hypothetical total return figures shown
above do not reflect sales charges, commissions, Trust expenses or taxes; the
Trusts are established at different times of the year; the Trust may not be
able to invest equally in the Strategy Stocks and may not be fully invested at
all times; and Equity Securities are often purchased or sold at prices
different from the closing prices used in buying and selling Units.
The chart below represents past performance of the Strategy Stocks, S&P 500,
the Dow Jones Industrial Average and the MSCI USA Index (but does not
represent possible performance of the Strategic Picks Combined Trust which, as
indicated above, includes certain expenses and commissions not included in the
chart) and should not be considered indicative of future results. Further,
results are hypothetical. The chart assumes that all dividends during a year
(including those on stocks trading ex-dividend as of the last day of the year)
are reinvested at the end of that year and does not reflect sales charges,
commissions, expenses or income taxes. Based on the foregoing assumptions, the
average annual returns (which represent the percentage return derived by
taking the sum of the initial investment and all appreciation and dividends
for the specified investment period) during the period referred to in the
table were 18.9%, 14.3%, 14.3% and 13.8% for the Strategy Stocks, the S&P 500,
the Dow Jones Industrial Average and the MSCI USA Index, respectively. There
can be no assurance that the Strategic Picks Combined Trust will outperform
the S&P 500, the Dow Jones Industrial Average or the MSCI USA Index over its
life or over consecutive rollover periods, if available.
<TABLE>
Value of $10,000 Invested January 1, 1977
<CAPTION>
Standard & Dow Jones MSCI
Strategy Poor's 500 Industrial USA
Period Stocks Index Average Index
- --------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
1977 $ 9,929 $ 9,284 $ 8,730 $ 9,289
1978 10,593 9,877 8,965 9,846
1979 12,148 11,674 9,908 11,211
1980 16,271 15,354 12,029 14,347
1981 17,297 14,610 11,620 13,845
1982 22,993 17,587 14,617 16,632
1983 29,479 21,510 18,366 20,142
1984 32,826 22,794 18,565 21,293
1985 45,227 29,872 24,650 27,902
1986 61,200 35,410 31,286 32,651
1987 66,496 37,418 33,170 34,091
1988 80,062 43,532 38,460 39,320
1989 102,859 57,118 50,656 51,199
1990 99,233 55,331 50,362 50,231
1991 140,286 71,930 62,414 65,386
1992 147,378 77,274 67,001 70,002
1993 172,616 84,940 78,217 76,876
1994 184,725 86,027 82,089 78,452
1995 253,701 117,952 112,043 107,511
1996 319,613 144,703 144,065 132,625
</TABLE>
RISK FACTORS
- --------------------------------------------------------------------------
General. An investment in Units should be made with an understanding of the
risks which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the Equity Securities or the general
condition of the common stock market may worsen and the value of the Equity
Securities and therefore the value of the Units may decline. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases of 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. Shareholders of
common stocks have rights to receive payments from the issuers of those common
stocks that are generally subordinate to those of creditors of, or holders of
debt obligations or preferred stocks of, such issuers. Shareholders of common
stocks of the type held by the Trusts have a right to receive dividends only
when and if, and in the amounts, declared by each issuer's board of directors
and have a right to participate in amounts available for distribution by such
issuer only after all other claims on such issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest 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. The value of common stocks is subject to
market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Equity Securities in a portfolio may be expected to
fluctuate over the life of the Trusts to values higher or lower than those
prevailing on the Initial Date of Deposit.
Holders of common stocks incur more risk than 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
stocks issued by, the issuer. 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 stockholders are also generally entitled to rights
on liquidation which are senior to those of common stockholders.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Equity Securities may depend on whether dealers will make a market in
the Equity Securities. There can be no assurance that a market will be made
for any of the Equity Securities, that any market for the Equity Securities
will be maintained or of the liquidity of the Equity Securities in any markets
made. In addition, the Trusts may be restricted under the Investment Company
Act of 1940 from selling Equity Securities to the Sponsor. The price at which
the Equity Securities may be sold to meet redemptions, and the value of the
Trusts, will be adversely affected if trading markets for the Equity
Securities are limited or absent.
The Trust Agreement authorizes the Sponsor to increase the size of the Trusts
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 Trusts and 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 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 Trusts
will pay the associated brokerage fees.
As described under "Trust Operating Expenses," all of the expenses of
the Trusts will be paid from the sale of Securities. It is expected that such
sales will be made at the end of the initial offering period and each month
thereafter through termination of the Trusts. Such sales will result in
capital gains and losses and may be made at times and prices which adversely
affect the Trusts. For a discussion of the tax consequences of such sales, see
"Federal Taxation."
Unitholders will be unable to dispose of any of the Equity Securities, as
such, and will not be able to vote the Equity Securities. As the holder of the
Equity Securities, the Trustee will have the right to vote all of the voting
stocks in the Trusts and will vote such stocks in accordance with the
instructions of the Sponsor. In the absence of any such instructions by the
Sponsor, the Trustee will vote such stocks so as to insure that the stocks are
voted as closely as possible in the same manner and the same general
proportion as are shares held by owners other than the Trusts.
FEDERAL TAXATION
- --------------------------------------------------------------------------
General. The following is a general discussion of certain of the Federal
income tax consequences of the purchase, ownership and disposition of the
Units. 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 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
the 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 the Trust.
2. A Unitholder will be considered to have received all of the dividends paid
on his pro rata portion of each Equity 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
"Rights of Unitholders--Reinvestment Option").
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, 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 stock is received by such Unitholder as described
below). The price a Unitholder pays for his Units, generally including sales
charges, is allocated among his pro rata portion of each Security held by the
Trust (in proportion to the fair market values thereof on the valuation date
nearest to the date the Unitholder purchases his Units) in order to determine
his tax basis for his pro rata portion of each Security held by the Trust. 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, any such capital gain will be short-term unless a
Unitholder has held his Units for more than one year.
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 and, will generally be long-term if the Unitholder has held his
Units for more than one year (the date on which the Units are acquired (i.e.,
the "trade date") is excluded for purposes of determining whether the
Units have been held for more than one year). 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) and, in general, will be
long-term if the Unitholder has held his Units for more than one year.
Unitholders should consult their tax advisers regarding the recognition of
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 next new Series of
the Trusts (the "1998 Trust") 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
1998 Trust 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.
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. It is possible that for federal income tax purposes
a portion of the deferred sales charge may be treated as interest which would
be deductible by a Unitholder subject to limitations on the deduction of
investment interest. In such a case, the non-interest portion of the deferred
sales charge would be added to the Unitholder's tax basis in his Units. The
deferred sales charge could cause the Unitholder's Units to be considered to
be debt-financed under Section 246A of the Code which would result in a small
reduction of the dividends-received deduction. In any case, 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 recently issued 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 the 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 above). For taxpayers
other than corporations, net capital gains are subject to a maximum marginal
stated tax rate of 28%. However, it should be noted that legislative proposals
are introduced from time to time that affect tax rates and could affect
relative differences at which ordinary income and capital gains are taxed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act")
raised tax rates on ordinary income while capital gains remain subject to a
28% maximum stated rate for taxpayers other than corporations. Because some or
all capital gains are taxed at a comparatively lower rate under the Tax Act,
the Tax Act includes a provision that recharacterizes capital gains as
ordinary income in the case of certain financial transactions that are
"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 have disposed 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.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the Trust. As discussed in "Rights of
Unitholders--Redemption of Units," 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
Distribution upon the termination of the Trust. See "Rights of
Unitholders--Redemption of Units". 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 "Rights of
Unitholders--Redemption of Units". 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 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 owned 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 upon the difference
between the amount of cash received by the Unitholder and his tax basis in
such fractional share of a Security held by the 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 the 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 "Rights of Unitholders--Special Redemption and Rollover in
New Trusts," a Unitholder may elect to become a Rollover Unitholder. To
the extent a Rollover Unitholder exchanges his Units for Units of the 1998
Trust 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
1998 Trust 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.
General. 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 by the Internal Revenue Service 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 non-resident
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 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.
In the opinion of Kroll & Tract LLP, special counsel to the Trust for New York
tax matters, the Trust is not an association taxable as a corporation and the
income of the Trust will be treated as the income of the Unitholders under the
existing income tax laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S. Unitholders
("U.S. Unitholders") with regard to federal and certain aspects of New
York State and City income taxes. Unitholders may be subject to taxation in
New York or 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 of 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.
TRUST OPERATING EXPENSES
- --------------------------------------------------------------------------
Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trusts. However, Van Kampen
American Capital Investment Advisory Corp., which is an affiliate of the
Sponsor, will receive an annual supervisory fee which is not to exceed the
amount set forth under "Summary of Essential Financial Information",
for providing portfolio supervisory services for the Trusts. Such fee (which
is based on the number of Units outstanding on January 1 of each year except
during the initial offering period in which event the calculation is based on
the number of Units outstanding at the end of the month of such calculation)
may exceed the actual costs of providing such supervisory services for these
Trusts, but at no time will the total amount received for portfolio
supervisory services rendered to all Series of the Fund and to any other unit
investment trusts sponsored by the Sponsor for which the Supervisor provides
portfolio supervisory services in any calendar year exceed the aggregate cost
to the Supervisor of supplying such services in such year. In addition,
American Portfolio Evaluation Services, which is a division of Van Kampen
American Capital Investment Advisory Corp., shall receive for regularly
providing evaluation services to the Trusts the annual per Unit evaluation fee
set forth under "Summary of Essential Financial Information" (which is
based on the number of Units outstanding on January 1 of each year for which
such compensation relates except during the initial offering period in which
event the calculation is based on the number of Units outstanding at the end
of the month of such calculation) for regularly evaluating the Trust
portfolios. The fees set forth herein are payable as described under
"General" below. Both of the foregoing fees may be increased without
approval of the Unitholders by amounts not exceeding proportionate increases
under the category "All Services Less Rent of Shelter" in the Consumer
Price Index published by the United States Department of Labor or, if such
category is no longer published, in a comparable category. The Sponsor will
receive sales commissions and may realize other profits (or losses) in
connection with the sale of Units and the deposit of the Securities as
described under "Public Offering--Sponsor and Other Compensation".
Trustee's Fee. For its services the Trustee will receive the annual per Unit
fee from the Trusts set forth under "Summary of Essential Financial
Information" (which is based on the number of Units outstanding at the end
of the month of such calculation until the end of the initial offering period
at which time such calculation is based on the number of Units outstanding on
such date). The fees set forth herein are payable as described under "
General" below. 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 Trusts is expected to result from the use
of these funds. Such fees may be increased without approval of the Unitholders
by amounts not exceeding proportionate increases under the category "All
Services Less Rent of Shelter" in the Consumer Price Index published by
the United States Department of Labor or, if such category is no longer
published, in a comparable category. For a discussion of the services rendered
by the Trustee pursuant to its obligations under the Trust Agreement, see
"Rights of Unitholders--Reports Provided" and "Trust Administration".
Miscellaneous Expenses. Expenses incurred in establishing each Trust,
including the cost of the initial preparation of documents relating to such
Trust (including the Prospectus, Trust Agreement and closing documents),
federal and state registration fees, the initial fees and expenses of the
Trustee, legal and accounting expenses, payment of closing fees and any other
out-of-pocket expenses, will be paid by each Trust and amortized over the life
of such Trust. The following additional charges are or may be incurred by such
Trust: (a) normal expenses (including the cost of mailing reports to
Unitholders) incurred in connection with the operation of the Trust, (b) fees
of the Trustee for extraordinary services, (c) expenses of the Trustee
(including legal and auditing expenses) and of counsel designated by the
Sponsor, (d) various governmental charges, (e) expenses and costs of any
action taken by the Trustee to protect the Trust and the rights and interests
of Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of the Trust without negligence, bad
faith or wilful misconduct on its part, (g) accrual of associated with
liquidating securities and (h) expenditures incurred in contacting Unitholders
upon termination of the Trust. The fees set forth herein are payable as
described under "General" below.
General. During the initial offering period of the Trusts, all of the fees and
expenses of the Trusts will accrue on a daily basis and will be charged to the
related Trust, in arrears, at the end of the initial offering period. After
the initial offering period, all of the fees and expenses of the Trusts will
accrue on a daily basis and will be charged to the related Trust, in arrears,
on a monthly basis on or before the tenth day of each month. The fees and
expenses are payable out of the Capital Account of the related Trust. When
such fees and expenses are paid by or owing to the Trustee, they are secured
by a lien on the related Trust's portfolio. If the balance in the Capital
Account is insufficient to provide for amounts payable by a Trust, the Trustee
has the power to sell Equity Securities to pay such amounts. It is expected
that the balance in the Capital Account will be insufficient to provide for
amounts payable by the Trusts and that Equity Securities will be sold from
related Trust to pay such amounts. These sales may result in capital gains or
losses to Unitholders. See "Federal Taxation".
PUBLIC OFFERING
- --------------------------------------------------------------------------
General. Units are offered at the Public Offering Price. During the initial
offering period and for secondary market transactions after the initial
offering period the Public Offering Price is based on the aggregate underlying
value of the Securities in a Trust's portfolio, the initial sales charge
described below, and cash, if any, in the Income and Capital Accounts held or
owned by such Trust. The initial sales charge is equal to the difference
between the maximum total sales charge for a Trust of 2.75% of the Public
Offering Price and the maximum deferred sales charge for a Trust ($0.175 per
Unit). The monthly deferred sales charge ($0.0175 per Unit) will begin
accruing on a daily basis on ________, 1997 and will continue to accrue
through ________, 1998. The monthly deferred sales charge will be charged to
each Trust, in arrears, commencing ________, 1997 and will be charged on the
__th day of each month thereafter through ________, 1998. If any deferred
sales charge payment date is not a business day, the payment will be charged
to the Trusts on the next business day. Unitholders will be assessed only that
portion of the deferred sales charge accrued from the time they became
Unitholders of record. Units purchased subsequent to the initial deferred
sales charge payment will be subject to only that portion of the deferred
sales charge payments not yet collected. This deferred sales charge will be
paid from funds in the Capital Account, if sufficient, or from the periodic
sale of Securities. The total maximum sales charge assessed to Unitholders on
a per Unit basis will be 2.75% of the Public Offering Price (2.828% of the
aggregate value of the Securities less the deferred sales charge). The initial
sales charge applicable to quantity purchases is reduced on a graduated basis
to any person acquiring 5,000 or more Units as follows:
<TABLE>
<CAPTION>
Aggregate Number of Units Percentage of Sales Charge
Purchased* Reduction Per Unit
- -------------------------- --------------------------------
<S> <C>
5,000 - 9,999 ............ 0.25%
10,000 - 14,999 .......... 0.50
15,000 - 99,999 .......... 0.85
100,000 or more........... 1.75
______________________ .
*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. The breakpoints will be
adjusted to take into consideration purchase orders stated
in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
</TABLE>
The sales charge reduction will primarily be the responsibility of the selling
broker, dealer or agent. This reduced sales charge structure will apply on all
purchases by the same person from any one dealer of units of Van Kampen
American Capital-sponsored unit investment trusts which are being offered in
the initial offering period (a) on any one day (the "Initial Purchase
Date") or (b) on any day subsequent to the Initial Purchase Date if (1)
the units purchased are of a unit investment trust purchased on the Initial
Purchase Date, and (2) the person purchasing the units purchased a sufficient
amount of units on the Initial Purchase Date to qualify for a reduced sales
charge on such date. In the event units of more than one trust are purchased
on the Initial Purchase Date, the aggregate dollar amount of such purchases
will be used to determine whether purchasers are eligible for a reduced sales
charge. Such aggregate dollar amount will be divided by the public offering
price per unit (on the day preceding the date of purchase) of each respective
trust purchased to determine the total number of units which such amount could
have purchased of each individual trust. Purchasers must then consult the
applicable trust's prospectus to determine whether the total number of units
which could have been purchased of a specific trust would have qualified for a
reduced sales charge and, if so qualified, the amount of such reduction.
Assuming a purchased qualified for a sales charge reduction or reductions, to
determine the applicable sales charge reduction or reductions it is necessary
to accumulate all purchases made on the Initial Purchase Date and all
purchases made in accordance with (b) above. Units purchased in the name of
the spouse of a purchaser or in the name of a child of such purchaser
("immediate family members") will be deemed for the purposes of calculating
the applicable sales charge to be additional purchases by the purchaser. The
reduced sales charges will also be applicable to a trustee or other fiduciary
purchasing securities for one or more trust estate or fiduciary accounts.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge
reduction for quantity purchases) less the concession the Sponsor typically
allows to brokers and dealers for purchases (see "Public Offering--Unit
Distribution") by (1) investors who purchase Units through registered
investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management service, or provide such
services in connection with the establishment of an investment account for
which a comprehensive "wrap fee" charge is imposed, (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity, (3) any person who for at least 90 days, has been an
officer, director or bona fide employee of any firm offering Units for sale to
investors or their immediate family members (as described above) and (4)
officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything
to the contrary in this Prospectus, such investors, bank trust departments,
firm employees and bank holding company officers and directors who purchase
Units through this program will not receive sales charge reductions for
quantity purchases.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law,
fathers-in-law, sons-in-law and daughters-in-law, and trustees, custodians or
fiduciaries for the benefit of such persons) of Van Kampen American Capital
Distributors, Inc. and its affiliates, dealers and their affiliates and
vendors providing services to the Sponsor may purchase Units at the Public
Offering Price less the applicable dealer concession.
During the initial offering period of the Trusts, unitholders of unaffiliated
unit investment trusts having an investment objective similar to the
investment objective of the Trusts may utilize proceeds received upon
termination or upon redemption immediately preceding termination of such
unaffiliated trust to purchase Units of the Trusts subject only to the
deferred sales charge described herein.
During the initial offering period, unitholders of any Van Kampen American
Capital-sponsored unit investment trust may utilize their redemption or
termination proceeds to purchase Units of the Trusts subject only to the
deferred sales charge described herein.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
accordance with fluctuations in the prices of the underlying Securities in the
Trusts.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
equal to the difference between the maximum total sales charge of 2.75% of the
Public Offering Price and the maximum deferred sales charge ($0.175 per Unit)
and dividing the sum so obtained by the number of Units outstanding. The
Public Offering Price per Unit shall include the proportionate share of any
cash held in the Income and Capital Accounts. Such price determination as of
the close of the relevant stock market on the day before the Initial Day of
Deposit was made on the basis of an evaluation of the Securities prepared by
Interactive Data Corporation, a firm regularly engaged in the business of
evaluating, quoting or appraising comparable securities. Thereafter, the
Evaluator on each business day will appraise or cause to be appraised the
value of the underlying Securities as of the Evaluation Time 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 prior to the
Evaluation Time on each such day. Orders received by the Trustee or Sponsor
for purchases, sales or redemptions after that time, or on a day which is not
a business day for the Trusts, will be held until the next determination of
price. Unitholders who purchase Units subsequent to the Initial Date of
Deposit will pay an initial sales charge equal to the difference between the
maximum total sales charge for a Trust of 2.75% of the Public Offering Price
and the maximum deferred sales charge for a Trust ($0.175 per Unit) and will
be assessed a deferred sales charge of $0.0175 per Unit on each of the
remaining deferred sales charge payment dates as set forth in "Public
Offering--General". The Sponsor currently does not intend to maintain a
secondary market after __________, 1997.
The aggregate underlying value of the Equity Securities during the initial
offering period is determined on each business day by the Evaluator in the
following manner: if the Equity Securities are listed on a national securities
exchange, this evaluation is generally based on the closing sale prices on
that exchange (unless it is determined that these prices are inappropriate as
a basis for valuation) or, if there is no closing sale price on that exchange,
at the closing ask prices. If the Equity Securities are not so listed or, if
so listed and the principal market therefore is other than on the exchange,
the evaluation shall generally be based on the current ask price on the
over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the value of
the Equity Securities on the ask side of the market or (c) by any combination
of the above.
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities but rather
the entire pool of Securities, taken as a whole, which are represented by the
Units.
Unit Distribution. During the initial offering period, Units will be
distributed to the public by the Sponsor, broker-dealers and others at the
Public Offering Price. Upon the completion of the initial offering period,
Units repurchased in the secondary market, if any, may be offered by this
Prospectus at the secondary market Public Offering Price in the manner
described above.
The Sponsor intends to qualify the Units for sale in a number of states.
Brokers, dealers and others will be allowed a concession or agency commission
in connection with the distribution of Units during the initial offering
period as set forth in the following table. A portion of such concessions or
agency commissions represents amounts paid by the Sponsor to such brokers,
dealers and others out of its own assets as additional compensation.
<TABLE>
<CAPTION>
Aggregate Number of Initial Offering Period Concession or Agency Commission
Units Purchased* per Unit
- ----------------------- ----------------------------------------------------------
<S> <C>
1 - 4,999 2.10%
5,000 - 9,999 1.85
10,000 - 14,999 1.60
15,000 - 99,999 1.25
100,000 or more 0.50
____________________
* The breakpoint concessions or agency commissions 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 broker, dealer or
agent. The breakpoints will be adjusted to take into consideration purchase
orders stated in dollars which cannot be completely fulfilled due to the
requirement that only whole Units be issued.
</TABLE>
Any quantity discount provided to investors will be borne by the selling
dealer or agent as indicated under "General" above. For transactions
involving Rollover Unitholders, the total concession or agency commission will
amount to 1.1% per Unit (or such lesser amount resulting from quantity sales
discounts). For all secondary transactions, the total concession or agency
commission will amount to 2.1% per Unit. Notwithstanding anything to the
contrary herein, the total of any concessions, agency commissions and any
additional compensation allowed or paid to any broker, dealer or other
distributor of Units with respect to any individual transaction, shall in no
case exceed the total sales charge applicable to such transaction.
Certain commercial banks are making Units available to their customers on an
agency basis. A portion of the sales charge (equal to the agency commission
referred to above) is retained by or remitted to the banks. 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 not indicated that these particular agency
transactions are not 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.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 100 Units except as stated
herein. In connection with fully disclosed transactions with the Sponsor, the
minimum purchase requirement will be that number of Units set forth in the
contract between the Sponsor and the related broker or agent. The Sponsor
reserves the right to reject, in whole or in part, any order for the purchase
of Units and to change the amount of the concession or agency commission to
dealers and others from time to time.
Sponsor and Other Compensation. The Sponsor will receive the gross sales
commission equal to 2.75% of the Public Offering Price of the Units, less any
reduced sales charge for quantity purchases as described under "
General" above. Any such quantity discount provided to investors will be
borne by the selling dealer or agent.
In addition, the Sponsor will realize a profit or will sustain a loss, as the
case may be, as a result of the difference between the price paid for the
Securities by the Sponsor and the cost of such Securities to the Trusts on the
Initial Date of Deposit as well as on subsequent deposits. See "Notes to
Portfolios". The Sponsor has not participated as sole underwriter or as
manager or as a member of the underwriting syndicates or as an agent in a
private placement for any of the Securities in the Trust portfolios. The
Sponsor may further realize additional profit or loss during the initial
offering period as a result of the possible fluctuations in the market value
of the Securities after a date of deposit, since all proceeds received from
purchasers of Units.
Broker-dealers of the Trusts, banks and/or others may be eligible to
participate in a program in which such firms receive from the Sponsor a
nominal award for each of their representatives who have sold a minimum number
of units of unit investment trusts created by the Sponsor during a specified
time period. In addition, at various times the Sponsor may implement other
programs under which the sales forces of brokers, dealers, banks and/or others
may be eligible to win other nominal awards for certain sales efforts, or
under which the Sponsor will reallow to such brokers, dealers, banks and/or
others that sponsor sales contests or recognition programs conforming to
criteria established by the Sponsor or participate in sales programs by the
Sponsor, an amount not exceeding the total applicable sales charges on the
sales generated by such persons 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 paid fees to qualifying
entities for certain services or activities which are primarily intended to
result in sales of Units of the Trusts. Such payments are made by the Sponsor
out of its own assets, and not out of assets of the Trusts. These programs
will not change the price Unitholders pay for their Units or the amount that
the Trusts will receive from the Units sold.
A person will become the owner of Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor prior
to the date of settlement for the purchase of Units may be used in the
Sponsor's business and may be deemed to be a benefit to the Sponsor, subject
to the limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor currently intends
to maintain a secondary market for Units for the period indicated. In so
maintaining a market, the Sponsor will also realize profits or sustain losses
in the amount of any difference between the price at which Units are purchased
and the price at which Units are resold (which price includes the applicable
sales charge). In addition, the Sponsor will also realize profits or sustain
losses resulting from a redemption of such repurchased Units at a price above
or below the purchase price for such Units, respectively.
Public Market. Although it is not obligated to do so, the Sponsor currently
intends to maintain a market for the Units offered hereby through ________,
1997 and offer continuously to purchase Units at prices, subject to change at
any time, based upon the aggregate underlying value of the Equity Securities
(computed as indicated under "Offering Price" above and "Rights of
Unitholders--Redemption of Units"). If the supply of Units exceeds demand
or if some other business reason warrants it, the Sponsor may either
discontinue all purchases of Units or discontinue purchases of Units at such
prices. In the event that a market is not maintained for the Units and the
Unitholder cannot find another purchaser, a Unitholder desiring to dispose of
his Units will be able to dispose of such Units by tendering them to the
Trustee for redemption at the Redemption Price. See "Rights of
Unitholders--Redemption of Units". A Unitholder who wishes to dispose of
his Units should inquire of his broker as to current market prices in order to
determine whether there is in existence any price in excess of the Redemption
Price and, if so, the amount thereof. Units sold prior to such time as the
entire deferred sales charge on such Units has been collected will be assessed
the amount of the remaining deferred sales charge at the time of sale.
Tax-Sheltered Retirement Plans. Units are available for purchase in connection
with certain types of tax-sheltered retirement plans, including Individual
Retirement Accounts for the individuals, Simplified Employee Pension Plans for
employees, qualified plans for self-employed individuals, and qualified
corporate pension and profit sharing plans for employees. The purchase of
Units may be limited by the plans' provisions and does not itself establish
such plans.
RIGHTS OF UNITHOLDERS
- --------------------------------------------------------------------------
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units will be evidenced by certificates unless a Unitholder or
the Unitholder's registered broker-dealer makes a written request to the
Trustee that ownership be in book entry form. Units are transferable by making
a written request to the Trustee and, in the case of Units evidenced by a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, and such certificate or
transfer instrument, exactly as his name appears on the records of the Trustee
and on the face of any certificate representing the Units to be transferred
with the signature guaranteed by a participant in the Securities Transfer
Agents Medallion Program ("STAMP") or such other signature guarantee
program in addition to, or in substitution for, STAMP as may be accepted by
the Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority. Certificates will be issued in denominations of one Unit or any
whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange. Destroyed, stolen,
mutilated or lost certificates will be replaced upon delivery to the Trustee
of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Distributions of Income and Capital. Any dividends received by a Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds from the sales
of Securities to meet redemptions of Units shall be segregated within the
Capital Account from proceeds from the sale of Securities made to satisfy the
fees, expenses and charges of a Trust.
The Trustee will distribute any income received with respect to any of the
Securities on or about the Income Account Distribution Date to Unitholders of
record on the preceding Income Record Date. See "Summary of Essential
Financial Information". Proceeds received on the sale of any Securities,
to the extent not used to meet redemptions of Units, pay the deferred sales
charge or pay expenses, will be distributed on the Capital Account
Distribution Date to Unitholders of record on the preceding Capital Account
Record Date. Proceeds received from the disposition of any of the Securities
after a record 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 such Capital Account. 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 distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account. Because
dividends are not received by the Trusts at a constant rate throughout the
year, such distributions to Unitholders are expected to fluctuate from
distribution to distribution. Persons who purchase Units will commence
receiving distributions only after such person becomes a record owner.
Notification to the Trustee of the transfer of Units is the responsibility of
the purchaser, but in the normal course of business such notice is provided by
the selling broker-dealer.
At the end of the initial offering period and as of the tenth day of each
month thereafter, the Trustee will deduct from the Capital Account amounts
necessary to pay the expenses of the Trusts (as determined on the basis set
forth under "Trust Operating Expenses"). The Trustee also may withdraw
from the Income and Capital Accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of
the Trusts. Amounts so withdrawn shall not be considered a part of a 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 such amounts as may be necessary to cover
redemptions of Units.
It is anticipated that the deferred sales charge will be collected from the
Capital Account. To the extent that amounts in the Capital Account are
insufficient to satisfy the then current deferred sales charge obligation,
Equity Securities may be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made to an
account maintained by the Trustee for purposes of satisfying Unitholders'
deferred sales charge obligations.
Reinvestment Option. Unitholders will initially have each distribution of
dividend income, capital gains and/or principal on their Units automatically
reinvested in additional Units of the Trusts under the "Automatic
Reinvestment Option" (to the extent Units may be lawfully offered for sale
in the state in which the Unitholder resides). Brokers and dealers who
distribute Units to Unitholders pursuant to the Automatic Reinvestment Option
may do so through two options. Brokers and dealers can use the Dividend
Reinvestment Service through Depository Trust Company or purchase the
available Automatic Reinvestment Option CUSIP. If a broker or dealer decides
to continue to utilize the Dividend Reinvestment Service through the
Depository Trust Company, the broker or dealer must have access to a PTS
terminal equipped with the Elective Dividend System function (EDS) prior to
the first Record Date set forth under "Summary of Essential Financial
Information". The second option available is to purchase the appropriate
CUSIP for automatic reinvestment. Unitholders receiving Units pursuant to
participation in the Automatic Reinvestment Option will be subject to the
remaining deferred sales charge payments due on Units (assuming for these
purposes such Units had been outstanding during the primary offering period).
Unitholders may also elect to receive distributions of dividend income,
capital gains and/or principal on their Units in cash. To receive cash, a
Unitholder or his or her broker or agent must file with the Trustee a written
notice of election, together with any certificate representing Units and other
documentation that the Trustee may then require, at least five days prior to
the Record Date for which the first distribution is to apply. A Unitholder's
election to receive cash will apply to all Units of a Trust owned by such
Unitholder and such election will remain in effect until changed by the
Unitholder.
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market") or,
until such time as additional Units cease to be issued by a Trust (see
"The Trust"), distributions may be reinvested in such additional Units. If
Units are unavailable in the secondary market, distributions which would
otherwise have been reinvested shall be paid in cash to the Unitholder on the
applicable Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
made at the net asset value for Units as of the Evaluation Time on the related
Income or Capital Account Distribution Dates. Under the reinvestment plan, the
Trust will pay the Unitholder's distributions to the Trustee which in turn
will purchase for such Unitholder full and fractional Units and will send such
Unitholder a statement reflecting the reinvestment.
Unitholders may also elect to have each distribution of interest income,
capital gains and/or principal on their Units automatically reinvested in
shares of any Van Kampen American Capital mutual funds (except for B shares)
which are registered in the Unitholder's state of residence. Such mutual funds
are hereinafter collectively referred to as the "Reinvestment Funds".
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each
Reinvestment Fund describes the investment policies of such fund and sets
forth the procedures to follow to commence reinvestment. A Unitholder may
obtain a prospectus for the respective Reinvestment Funds from Van Kampen
American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181. Texas residents who desire to reinvest may request that a
broker-dealer registered in Texas send the prospectus relating to the
respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units
will, on the applicable distribution date, automatically be applied, as
directed by such person, as of such distribution date by the Trustee to
purchase shares (or fractions thereof) of the applicable Reinvestment Fund at
a net asset value as computed as of the close of trading on the New York Stock
Exchange on such date. Unitholders with an existing Guaranteed Reinvestment
Option (GRO) Program account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new GRO
account which allows purchases of Reinvestment Fund shares at net asset value
as described above. Confirmations of all reinvestments by a Unitholder into a
Reinvestment Fund will be mailed to the Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions on his or her
Units in cash. There will be no charge or other penalty for such termination.
The Sponsor, each Reinvestment Fund, and its investment adviser shall have the
right to suspend or terminate the reinvestment plan at any time.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being
distributed, expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. Within a reasonable period of time after
the end of each calendar year, the Trustee shall furnish to each person who at
any time during the calendar year was a registered Unitholder of a Trust a
statement (i) as to the Income Account: income received, deductions for
applicable taxes and for fees and expenses of the Trust, for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (ii) as to the Capital Account: the
dates of disposition of any Securities and the net proceeds received
therefrom, deductions for payment of applicable taxes, fees and expenses of
the Trust held for distribution to Unitholders of record as of a date prior to
the determination and the balance remaining after such distributions and
deductions expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (iii) a list of the Securities held by the Trust
and the number of Units outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (v) amounts actually distributed
during such calendar year from the Income and Capital Accounts, separately
stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286 and, in the case of Units
evidenced by a certificate, by tendering such certificate to the Trustee, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as described above (or by providing satisfactory indemnity, as in
connection with lost, stolen or destroyed certificates) and by payment of
applicable governmental charges, if any. No redemption fee will be charged. On
the third business day following such tender, the Unitholder will be entitled
to receive in cash (unless the redeeming Unitholder elects an In Kind
Distribution as described below) an amount for each Unit equal to the
Redemption Price per Unit next computed after receipt by the Trustee of such
tender of Units. The "date of tender" is deemed to be the date on
which Units are received by the Trustee, except that with respect to Units
received after the applicable Evaluation Time the date of tender is the next
business day as defined under "Public Offering--Offering Price" and
such Units will be deemed to have been tendered to the Trustee on such day for
redemption at the redemption price computed on that day.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by
the Trustee from those designated on a current list provided by the Supervisor
for this purpose. Units so redeemed shall be cancelled. Units tendered for
redemption prior to such time as the entire deferred sales charge on such
Units has been collected will be assessed the amount of the remaining deferred
sales charge at the time of redemption.
Unitholders tendering 1,000 or more Units of a Trust for redemption may
request from the Trustee in lieu of a cash redemption an in kind distribution
("In Kind Distribution") of an amount and value of Securities per Unit
equal to the Redemption Price per Unit as determined as of the evaluation next
following the tender. An In Kind Distribution on redemption of Units will be
made by the Trustee through the distribution of each of the Securities in
book-entry form to the account of the Unitholder's bank or broker-dealer at
Depository Trust Company. The tendering Unitholder will receive his pro rata
number of whole shares of each of the Securities comprising the related Trust
portfolio and cash from the Capital Account equal to the fractional shares to
which the tendering Unitholder is entitled. The Trustee may adjust the number
of shares of any issue of Securities included in a Unitholder's In Kind
Distribution to facilitate the distribution of whole shares, such adjustment
to be made on the basis of the value of Securities on 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
according to the criteria discussed above.
To the extent that Securities are redeemed in kind or sold, the size of a
Trust will be, and the diversity of a Trust may be, reduced. 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. Special federal income tax consequences will result if a
Unitholder requests an In Kind Distribution. See "Federal Taxation".
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the aggregate underlying value of
the Equity Securities, plus or minus cash, if any, in the Income and Capital
Accounts. On the Initial Date of Deposit, the Public Offering Price per Unit
(which includes the initial sales charge) exceeded the values at which Units
could have been redeemed by the amounts shown under "Summary of Essential
Financial Information". The Redemption Price per Unit is the pro rata
share of each Unit in a Trust determined on the basis of (i) the cash on hand
in the Trust, (ii) the value of the Securities and (iii) dividends receivable
on the Equity Securities trading ex-dividend as of the date of computation,
less (a) amounts representing taxes or other governmental charges payable out
of the Trust and (b) the accrued expenses of the Trust. The Evaluator may
determine the value of the Equity Securities in the following manner: if the
Equity Securities are listed on a national securities exchange, this
evaluation is generally based on the closing sale prices on that exchange
(unless it is determined that these prices are inappropriate as a basis for
valuation) or, if there is no closing sale price on that exchange, at the
closing bid prices. If the Equity Securities are not so listed or, if so
listed and the principal market therefore is other than on the exchange, the
evaluation shall generally be based on the current bid price on the
over-the-counter market (unless these prices are inappropriate as a basis for
evaluation). If current bid prices are unavailable, the evaluation is
generally determined (a) on the basis of current bid prices for comparable
securities, (b) by appraising the value of the Equity Securities on the bid
side of the market or (c) by any combination of the above.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit.
Special Redemption and Rollover in New Trusts. It is expected that a special
redemption will be made of all Units held by any Unitholder (a "Rollover
Unitholder") who affirmatively notifies the Trustee in writing that he
desires to rollover his Units by the Rollover Notification Date specified in
the "Summary of Essential Financial Information".
All Units of Rollover Unitholders will be redeemed on the Special Redemption
Date and the underlying Securities will be distributed to the Distribution
Agent on behalf of the Rollover Unitholders. On the Special Redemption Date
(as set forth in "Summary of Essential Financial Information"), 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 Special Redemption Date. The Sponsor does not anticipate
that the period will be longer than one day given that the Securities are
usually liquid. However, certain of the factors discussed under "Risk
Factors" could affect the ability of the Sponsor to sell the Securities
and thereby affect the length of the sale period somewhat. 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.
The Rollover Unitholders' proceeds will be invested in the next subsequent
Series of the Trusts (the "1998 Trust"), if then being offered, which
will contain a portfolio of common stocks selected in accordance with the
investment strategies of the current Trusts. The proceeds of redemption will
be used to buy 1998 Trust units in the portfolio as the proceeds become
available.
The Sponsor intends to create the 1998 Trust shortly prior to the Special
Redemption Date, dependent upon the availability and reasonably favorable
prices of the securities included in the 1998 Trust portfolio, and it is
intended that Rollover Unitholders will be given first priority to purchase
the 1998 Trust units. There can be no assurance, however, as to the exact
timing of the creation of the 1998 Trust units or the aggregate number of 1998
Trust units which the Sponsor will create. The Sponsor may, in its sole
discretion, stop creating new units in a trust portfolio at any time it
chooses, regardless of whether all proceeds of the Special Redemption have
been invested on behalf of Rollover Unitholders. Cash which has not been
invested on behalf of the Rollover Unitholders in 1998 Trust units will be
distributed shortly after the Special Redemption Date.
Any Rollover Unitholder may thus be redeemed out of the Trusts and become a
holder of an entirely different unit investment trust in the 1998 Trust with a
different portfolio of Securities. The Rollover Unitholders' Units will be
redeemed and the distributed Securities shall be sold on the Special
Redemption Date. In accordance with the Rollover Unitholders' offer to
purchase the 1998 Trust units, the proceeds of the sales (and any other cash
distributed upon redemption) will be invested in the 1998 Trust at the public
offering price, including the applicable sales charge per Unit (which for
Rollover Unitholders is currently expected to be 1.75% of the Public Offering
Price of the 1998 Trust units).
This process of redemption and rollover into a new trust is intended to allow
for the fact that the portfolios selected by the Sponsor are chosen on the
basis of growth potential only for a year, 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 1998 Trust 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 the Trusts will
avoid any negative market price consequences stemming from the trading of
large volumes of securities and of the underlying Securities in the Trusts.
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 on the Special Redemption and 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 Series of the Trusts, no cash would
be distributed at that time to pay any taxes. Included in the cash for the
Special Redemption and 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
Taxation". 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 Special Redemption and 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 1998 Trust or any subsequent Series of the Trusts, without penalty or
incurring liability to any Unitholder. If the Sponsor so decides, the Sponsor
shall notify the Unitholders before the Special Redemption Date would have
commenced. The Sponsor may modify the terms of the 1998 Trust or any
subsequent Series of the Trusts. The Sponsor may also modify the terms of the
Special Redemption and Rollover in the 1998 Trust upon notice to the
Unitholders prior to the Rollover Notification Date specified in the related
"Summary of Essential Financial Information".
TRUST ADMINISTRATION
- --------------------------------------------------------------------------
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any Units
tendered for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the next
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.
Portfolio Administration. The portfolios of the Trusts are not
"managed" by the Sponsor, Supervisor or the Trustee; their activities
described herein are governed solely by the provisions of the Trust Agreement.
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 Trusts, however, will not be
managed. The Trust Agreement, however, provides that the Sponsor may (but need
not) direct the Trustee to dispose of an Equity Security in certain events
such as the issuer having defaulted on the payment on any of its outstanding
obligations or the price of an Equity 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 a Trust. Pursuant to the
Trust Agreement and with limited exceptions, the Trustee may sell any
securities or other properties acquired in exchange for Equity 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 a Trust, they may be accepted for deposit in such Trust and either
sold by the Trustee or held in such Trust pursuant to the direction of the
Sponsor (who may rely on the advice of the Supervisor). Proceeds from the sale
of Securities (or any securities or other property received by a Trust in
exchange for Equity Securities) are credited to the Capital Account for
distribution to Unitholders, pay an accrued deferred sales charge, to meet
redemptions or to pay certain costs or expenses of such Trust. Except as
stated under "Trust Portfolios" for failed securities and as provided
in this paragraph, the acquisition by a Trust of any securities other than the
Securities is prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above,
the Trustee may also sell Securities designated by the Supervisor, or if no
such designation has been made, in its own discretion, for the purpose of
redeeming Units tendered for redemption and the payment of expenses.
The Supervisor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares of
individual issues of Equity Securities in a Trust. To the extent this is not
practicable, the composition and diversity of the Equity Securities in a Trust
may be altered. In order to obtain the best price for a Trust, it may be
necessary for the Supervisor to specify minimum amounts (generally 100 shares)
in which blocks of Equity Securities are to be sold. The Sponsor may consider
sales of units of unit investment trusts which it sponsors in selecting
broker/dealers to execute the Trusts' portfolio transactions.
Amendment or 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 thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders (as determined in good faith by the Sponsor
and the Trustee), provided, however, that the Trust Agreement may not be
amended to increase the number of Units (except as provided in the Trust
Agreement). The Trust Agreement may also be amended in any respect by the
Trustee and Sponsor, or any of the provisions thereof may be waived, with the
consent of the holders representing 51% of the Units of a Trust then
outstanding, provided that no such amendment or waiver will reduce the
interest in such Trust of any Unitholder 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. The Trustee shall
advise the Unitholders of any amendment promptly after execution thereof.
Each Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units then outstanding or by the Trustee when the
value of the Equity Securities owned by such Trust, as shown by any
evaluation, is less than that amount set forth under Minimum Termination Value
in "Summary of Essential Financial Information." A Trust will be
liquidated by the Trustee in the event that a sufficient number of Units not
yet sold are tendered for redemption by the Sponsor so that the net worth of
such Trust would be reduced to less than 40% of the value of the Securities at
the time they were deposited in such Trust. If a Trust is liquidated because
of the redemption of unsold Units by the Sponsor, the Sponsor will refund to
each purchaser of Units the entire sales charge paid by such purchaser. The
Trust Agreement will terminate upon the sale or other disposition of the last
Security held thereunder, but in no event will it continue beyond the
Mandatory Termination Date stated under "Summary of Essential Financial
Information".
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trusts. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. The Sponsor shall direct the liquidation of the Securities in such
manner as to effectuate orderly sales and a minimal market impact. In the
event the Sponsor does not so direct, the Securities shall be sold within a
reasonable period and in such manner as the Trustee, in its sole discretion,
shall determine. At least 30 days before the Mandatory Termination Date the
Trustee will provide written notice of any termination to all Unitholders and
will include with such notice a form to enable Unitholders owning 1,000 or
more Units to request an In Kind Distribution rather than payment in cash upon
the termination of the Trusts. To be effective, this request must be returned
to the Trustee at least five business days prior to the Mandatory Termination
Date. On the Mandatory Termination Date (or on the next business day
thereafter if a holiday) the Trustee will deliver each requesting Unitholder's
pro rata number of whole shares of each of the Securities in the related Trust
to the account of the broker-dealer or bank designated by the Unitholder at
Depository Trust Company. The value of the Unitholder's fractional shares of
the Securities will be paid in cash. Unitholders with less than 1,000 Units,
Unitholders with 1,000 or more Units not requesting an In Kind Distribution
and Unitholders who do not elect the Rollover Option will receive a cash
distribution from the sale of the remaining Securities within a reasonable
time following the Mandatory Termination Date. Regardless of the distribution
involved, the Trustee will deduct from the funds of a Trust any accrued costs,
expenses, advances or indemnities provided by the Trust Agreement, including
estimated compensation of the Trustee, costs of liquidation and any amounts
required as a reserve to provide for payment of any applicable taxes or other
governmental charges. Any sale of Securities upon termination may result in a
lower amount than might otherwise be realized if such sale were not required
at such time. The Trustee will then distribute to each Unitholder his pro rata
share of the balance of the Income and Capital Accounts.
The Sponsor currently intends to, but is not obligated to, offer for sale
units of a subsequent Series of the Trusts pursuant to the Rollover Option
(see "Rights of Unitholders--Special Redemption and Rollover in New
Fund"). There is, however, no assurance that units of any new Series of
the Trusts will be offered for sale at that time, or if offered, that there
will be sufficient units available for sale to meet the requests of any or all
Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a final
distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and the
Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder.
The Trustee shall not be liable for depreciation or loss incurred by reason of
the sale by the Trustee of any of the Securities. In the event of the failure
of the Sponsor to act under the Trust Agreement, the Trustee may act
thereunder and shall not be liable for any action taken by it in good faith
under the Trust Agreement. The Trustee shall not be liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or
upon the interest thereon or upon it as Trustee under the Trust Agreement or
upon or in respect of a Trust which the Trustee may be required to pay under
any present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Trust Agreement
contains other customary provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement 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, Sponsor or Unitholders for errors in judgment. This provision shall
not protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. Prior to October 31, 1996, VK/AC Holding,
Inc. was controlled, through the ownership of a substantial majority of its
common stock, by The Clayton & Dubilier Private Equity IV Limited Partnership.
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings
II, Inc. and MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged
with and into VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving
corporation (the "Acquisition").
As a result of the Acquisition, VK/AC Holding, Inc. became a wholly owned
subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly owned
subsidiary of Morgan Stanley Group Inc. Morgan Stanley Group Inc. and various
of its directly or indirectly owned subsidiaries, including Morgan Stanley
Asset Management Inc., an investment adviser ("MSAM"), Morgan Stanley
& Co. Incorporated, a registered broker-dealer and investment adviser, and
Morgan Stanley Capital International, are engaged in a wide range of financial
services. Their principal businesses include securities underwriting,
distribution and trading; merger, acquisition, restructuring and other
corporate finance advisory activities; merchant banking; stock brokerage and
research services; asset management; trading of futures, options, foreign
exchange commodities and swaps (involving foreign exchange, commodities,
indices and interest rates); real estate advice, financing and investing; and
global custody, securities clearance services and securities lending. As of
December 31, 1996, MSAM, together with its affiliated investment advisory
companies, had approximately $113 billion of assets under management and
fiduciary advice.
On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover & Co.
announced that they had entered into an Agreement and Plan of Merger to form
Morgan Stanley, Dean Witter, Discover & Co. Subject to certain conditions
being met, it is currently anticipated that the transaction will close in
mid-1997. Thereafter, Van Kampen American Capital Distributors, Inc. will be
an indirect subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.
Van Kampen American Capital Distributors, Inc. specializes in the underwriting
and distribution of unit investment trusts and mutual funds with roots in
money management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas 77056, (713) 993-0500. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco, Seattle and Tampa. As of November 30, 1996 the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Trusts or to any other Series thereof. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
As of December 31, 1996, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $59 billion of investment
products, of which over $11.88 billion is invested in municipal securities.
The Sponsor and its Van Kampen American Capital affiliates managed $48 billion
of assets, consisting of $29.9 billion for 59 open end mutual funds (of which
46 are distributed by Van Kampen American Capital Distributors, Inc.), $13.1
billion for 38 closed-end funds and $4.99 billion for 106 institutional
accounts. The Sponsor has also deposited approximately $26 billion of unit
investment trusts. All of Van Kampen American Capital's open-end funds,
closed-end funds and unit investment trusts are professionally distributed by
leading financial firms nationwide. Based on cumulative assets deposited, the
Sponsor believes that it is the largest sponsor of insured municipal unit
investment trusts, primarily through the success of its Insured Municipals
Income Trust(R)or the IM-IT(R)trust. The Sponsor also provides
surveillance and evaluation services at cost for approximately $13 billion of
unit investment trust assets outstanding. Since 1976, the Sponsor has serviced
over two million investor accounts, opened through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (i) appoint
a successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a 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 (800)
221-7668. 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 duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolios.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trusts. Such
records shall include the name and address of, and the number of Units held
by, every Unitholder of the Trusts. Such books and records shall be open to
inspection by any Unitholder at all reasonable times during the usual business
hours. The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or federal statute, rule or
regulation (see "Rights of Unitholders--Reports Provided"). The
Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Securities held in each Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities 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 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. 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
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
- --------------------------------------------------------------------------
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Kroll & Tract LLP has acted as counsel for the
Trustee.
Independent Certified Public Accountants. The statements of condition and the
related securities portfolios at the Initial Date of Deposit included in this
Prospectus have been audited by Grant Thornton LLP, independent certified
public accountants, as set forth in their report in this Prospectus, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen American Capital Equity Opportunity Trust,
Series 57:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen American Capital Equity Opportunity Trust, Series 57
as of ____________, 1997. The statements of condition and portfolios are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
such financial statements 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 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of irrevocable letters 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 financial statement presentation.
We believe our audit provides a reasonable basis for our opinion. In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Van Kampen American Capital
Equity Opportunity Trust, Series 57 as of ____________, 1997, in conformity
with generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
____________, 1997
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 57
STATEMENTS OF CONDITION
As of _____________, 1997
<CAPTION>
Strategic
Strategic Picks
INVESTMENT IN SECURITIES Picks Combined
Trust Trust
------------- -------------
<S> <C> <C>
Contracts to purchase Securities <F1>...........$ $
Organizational costs <F2>.......................
------------- -------------
Total..........................................$ $
============= =============
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--...................................
Accrued organizational costs <F2>..............$ $
Deferred sales charge liability <F3>...........
Interest of Unitholders-- ......................
Cost to investors <F4>.........................
Less: Gross underwriting commission <F4><F5>...
------------- -------------
Net interest to Unitholders <F4>...............
------------- -------------
Total..........................................$ $
============= =============
==========
<FN>
<F1>The aggregate value of the Securities listed under each "Portfolio"
herein and their cost to each Trust are the same. The value of the Securities
is determined by Interactive Data Corporation on the bases set forth under
"Public Offering--Offering Price". The contracts to purchase
Securities are collateralized by a letter of credit of $_________ which has
been deposited with the Trustee.
<F2>Each Trust will bear all or a portion of its organizational costs, which will
be deferred and amortized over the life of such Trust. Organizational costs
have been estimated based on a projected Trust size of $_____ and $_____ for
the Strategic Picks and Strategic Picks Combined Trusts, respectively. To the
extent a Trust is larger or smaller, the estimate will vary. Securities will
be sold to pay organizational costs.
<F3>Represents the amount of mandatory distributions from the Trusts on the bases
set forth under "Public Offering."
<F4>The aggregate public offering price and the aggregate initial sales charge are
computed on the bases set forth under "Public Offering--Offering Price"
and "Public Offering--Sponsor and Other Compensation" and assume all
single transactions involve less than 5,000 Units. For single transactions
involving 5,000 or more Units, the sales charge is reduced (see "Public
Offering--General") resulting in an equal reduction in both the Cost to
investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.
<F5>Assumes the maximum sales charge.
</TABLE>
<TABLE>
STRATEGIC PICKS OPPORTUNITY TRUST, JUNE 1997 SERIES
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 57)
as of the Initial Date of Deposit: _____________, 1997
<CAPTION>
Estimated
Market Value Annual Cost of
Number of per Share Dividends per Securities to
Shares Name of Issuer <F1> <F2> Share <F2> Trust <F2>
- ------------- ---------------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
$ $ $
$
============= ================
</TABLE>
<TABLE>
STRATEGIC PICKS OPPORTUNITY TRUST - COMBINED SERIES, JUNE 1997
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 57)
as of the Initial Date of Deposit: _____________, 1997
<CAPTION>
Estimated
Market Value Annual Cost of
Number of per Share Dividends per Securities to
Shares Name of Issuer <F1> <F2> Share <F2> Trust <F2>
- ------------- ---------------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
$ $ $
$
============= ================
</TABLE>
NOTES TO PORTFOLIOS
- --------------------------------------------------------------------------
(1) All of the 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 right, title and interest in and to such Securities.
Contracts to acquire Securities were entered into on ___________, 1997 and are
expected to settle on ___________, 1997. (see "The Trust").
(2) The market value of each of the Equity Securities is based on the closing
sale price of each listed Security on the applicable exchange, or on the
asked price if not so listed, on the day prior to the Initial Date of
Deposit. Estimated annual dividends are based on the most recently declared
dividends. The aggregate value of the Securities on the day prior to the
Initial Date of Deposit based on the closing sale price of each listed
Security, and on the bid price if not so listed, (which is the basis on
which the Redemption Price per Unit will be determined) was $_________.
The ask price of the applicable Securities (the basis on which the Public
Offering Price per Unit will be determined during the initial offering
period) is greater than the bid price of such Securities. Other
information regarding the Securities in the Trusts, as of the Initial
Date of Deposit is as follows:
<TABLE>
<CAPTION>
Aggregate
Profit (Loss) To Estimated
Cost To Sponsor Sponsor Annual Dividends
------------------- --------------------- --------------------
<S> <C> <C> <C>
Strategic Picks Trust $ $ $
Strategic Picks Combined Trust $ $ $
</TABLE>
An affiliate of the Sponsor may have participated as issuer, sole underwriter,
managing underwriter or member of an underwriting syndicate in a public
offering of one or more of the stocks in the Trusts. An affiliate of the
Sponsor may serve as a specialist in the stocks in the Trusts on one or more
stock exchanges and may have a long or short position in any of these stocks
or in options on any of these stocks, and may be on the opposite side of
public orders executed on the floor of an exchange where such stocks are
listed. An officer, director or employee of the Sponsor or an affiliate may be
an officer or director of one or more of the issuers of the stocks in the
Trusts. An affiliate of the Sponsor may trade for its own account as an
odd-lot dealer, market maker, block positioner and/or arbitrageur in any
stocks or options relating thereto. The Sponsor, its affiliates, directors,
elected officers and employee benefit programs may have either a long or short
position in any stock or option of the issuers.
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the Fund
or the Sponsor. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any person to whom
it is not lawful to make such offer in such state.
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Title Page
<S> <C>
Summary of Essential Financial Information........... 4
The Trusts........................................... 8
Objectives and Securities Selection.................. 9
Trust Portfolios..................................... 12
Risk Factors......................................... 17
Federal Taxation..................................... 18
Trust Operating Expenses............................. 22
Public Offering...................................... 23
Rights of Unitholders................................ 28
Trust Administration................................. 33
Other Matters........................................ 38
Report of Independent Certified Public Accountants... 38
Statements of Condition ............................. 39
Portfolios........................................... 40
Notes to Portfolios.................................. 42
</TABLE>
This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Fund has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
When Units of the Trusts are no longer available, or for investors who will
reinvest into subsequent series of the Trusts, 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.
PROSPECTUS
______________, 1997
Van Kampen
American Capital
Equity Opportunity
Trust, Series 57
Strategic Picks
Opportunity Trust,
June 1997 Series
Strategic Picks
Opportunity Trust-Combined Series,
June 1997
A Wealth of Knowledge A Knowledge of Wealth
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this Prospectus for future reference.
This Amendment of Registration Statement comprises the following
papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement (to be filed by amendment).
3.1 Opinion and consent of counsel as to legality of securities being
registered (to be filed by amendment).
4.1 Consent of Interactive Data Corporation (to be filed by amendment).
4.2 Consent of Independent Certified Public Accountants (to be filed by
amendment).
Financial Data Schedule (to be filed by amendment).
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series
57 has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Chicago and State of Illinois on the 29th day of May, 1997.
Van Kampen American Capital Equity
Opportunity Trust, Series 57
(Registrant)
By Van Kampen American Capital
Distributors, Inc.
(Depositor)
Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on May 28,
1997 by the following persons who constitute a majority of the Board of
Directors of Van Kampen American Capital Distributors, Inc.
Signature Title
Don G. Powell Chairman, Chief Executive )
Officer )
William R. Molinari President and Chief )
Operating Officer )
Ronald A. Nyberg Executive Vice President )
and General Counsel )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
Sandra A. Waterworth (Attorney-in-fact)*
_________________________________________________________________________
*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 Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust, Multi-Series 203 (File No. 33-65744)
and with the Registration Statement on Form S-6 of Insured Municipals
Income Trust, 170th Insured Multi-Series (File No. 33-55891) and the same
are hereby incorporated herein by this reference.
