File No. 333-41825
CIK #0001025230
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Van Kampen American Capital Equity Opportunity Trust, Series 84
(Exact Name of Trust)
Van Kampen Funds Inc.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
VAN KAMPEN FUNDS INC. CHAPMAN AND CUTLER
Attention: A. Thomas Smith III, General Counsel Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective
on February 22, 1999 pursuant to paragraph (b) of Rule 485.
INTERNATIONAL ASSETS ADVISORY CORP.
GLOBAL PASSPORT SERIES
INFRASTRUCTURE AND UTILITIES GROWTH TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 84
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PROSPECTUS PART ONE
NOTE: Part I of this Prospectus may not be distributed unless accompanied
by Part II.
Please retain both parts of this Prospectus for future reference.
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THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 84 (the
"Fund") is comprised of one unit investment trust, Infrastructure and Utilities
Growth Trust, Series 1 (the "Trust"). The Trust offers investors the opportunity
to purchase Units representing proportionate interests in a fixed, diversified
portfolio of common stocks issued by foreign and domestic companies, which on
the Date of Deposit, International Assets Advisory Corp. (the "Managing
Underwriter") believed had substantial present or future opportunities in the
infrastructure development and utility industry. Unless terminated earlier, the
Trust will terminate on December 18, 2004 and 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. Unless
otherwise indicated, all amounts herein are stated in U.S. dollars computed on
the basis of the exchange rate for the relevant currency.
PUBLIC OFFERING PRICE
The Public Offering Price per Unit is equal to the aggregate underlying
value of the Equity Securities plus or minus cash, if any, in the Capital and
Income Accounts plus the applicable sales charge as described herein, divided by
the number of Units outstanding.
See "Summary of Essential Financial Information".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is February 22, 1999
INFRASTRUCTURE AND UTILITIES GROWTH TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 84
Summary of Essential Financial Information
As of December 4, 1998
Managing Underwriter: International Assets Advisory Corp.
Sponsor: Van Kampen Funds Inc.
Supervisor: Global Assets Advisors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
Infrastructure and
Utilities Growth
Trust
----------------
<S> <C>
General Information
Number of Units 132,626
Fractional Undivided Interest in Trust per Unit 1/132,626
Public Offering Price:
Aggregate Value of Securities in Portfolio (1) $ 1,123,836
Aggregate Value of Securities per Unit (including accumulated dividends) $ 8.53
Sales charge 5.5% (5.820% of Aggregate Value of Securities
excluding principal cash) per Unit (3) $ .46
Public Offering Price per Unit (2)(3) $ 8.99
Redemption Price per Unit $ 8.53
Secondary Market Repurchase Price per Unit $ 8.53
Excess of Public Offering Price per Unit Over Redemption Price per Unit $ .46
Supervisor's Annual Supervisory Fee Maximum of $.007 per Unit
Evaluator's Annual Fee Maximum of $.0025 per Unit
Evaluation Time Close of the New York Stock Exchange
Initial Date of Deposit December 18, 1997
Mandatory Termination Date December 18, 2004
Minimum Termination Value The 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 deposits has
exceeded $15,000,000, then
the Trust Agreement may be
terminated if the net asset
value of such Trust is less
than $3,000,000.
Estimated Annual Dividends per Unit $.13781
Trustee's Annual fee (4) $.008 per Unit
Income and Capital Account Record Date TENTH day of December.
Income and Capital Distribution Date TWENTY-FIFTH day of December.
</TABLE>
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(1)Equity Securities listed on a national or foreign securities exchange are
valued at the closing sale price, or if no such price exists, or if the
Equity Securities are not listed, at the closing bid price thereof. The
aggregate value of securities in the Trust is based on the U.S. dollar value
of foreign securities based on the related currency exchange rate at the
Evaluation Time.
(2)Anyone ordering Units will have added to the Public Offering Price a pro
rata share of any cash in the Income and Capital Accounts.
(3)Effective on each December 18, commencing December 18, 1998, the secondary
sales charge will decrease by .5 of 1% to a minimum
sales charge of 3.0%. See "Public Offering - Offering Price" in Part Two.
(4)The Trustee will receive additional annual compensation with respect to
Securities held in a sub-custodian account at month end.
PORTFOLIO
The Infrastructure and Utilities Growth Trust consists of stocks issued by
infrastructure development and utility companies which on the Date of Deposit,
International Assets Advisory Corp. (the "Managing Underwriter") believed had
substantial present or future opportunities in the infrastructure development
and utility industries.
<TABLE>
<CAPTION>
PER UNIT INFORMATION
1998 (1)
------------
<S> <C>
Net asset value per Unit at beginning of period........................................................ $ 10.00
============
Net asset value per Unit at end of period.............................................................. $ 8.44
============
Distributions to Unitholders of investment income including accumulated dividends paid
on Units redeemed (average Units outstanding for entire period)..................................... $ .07
============
Distributions to Unitholders from Security sales proceeds (average Units
outstanding for entire period)...................................................................... $ --
============
Unrealized appreciation (depreciation) of Equity Securities (per Unit outstanding at
end of period)...................................................................................... $ (1.78)
============
Units outstanding at end of period..................................................................... 138,826
</TABLE>
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(1) For the period from December 18, 1997 (date of deposit) through
October 31, 1998.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of
Infrastructure and Utilities Growth Trust, Series 1 (Van Kampen American
Capital Equity Opportunity Trust, Series 84):
We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of Infrastructure and
Utilities Growth Trust, Series 1 (Van Kampen American Capital Equity Opportunity
Trust, Series 84) as of October 31, 1998 and the related statements of
operations and changes in net assets for the period from December 18, 1997 (date
of deposit) through October 31, 1998. These statements are the responsibility of
the Trustee and the Sponsor. Our responsibility is to express an opinion on such
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 securities owned at October 31, 1998 by correspondence with the
Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee and 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 the Infrastructure and
Utilities Growth Trust, Series 1 (Van Kampen American Capital Equity Opportunity
Trust, Series 84) as of October 31, 1998 and the results of operations and
changes in net assets for the period from December 18, 1997 (date of deposit)
through October 31, 1998, in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
Chicago, Illinois
December 24, 1998
INFRASTRUCTURE AND UTILITIES GROWTH TRUST, SERIES 1
Statement of Condition
October 31, 1998
<TABLE>
<CAPTION>
Infrastructure and
Utilities Growth
Trust
---------------
<S> <C>
Trust property
Cash $ 16,120
Securities at market value, (cost $ 1,401,342 ) (note 1) 1,153,879
Accumulated dividends 1,294
Receivable for securities sold --
---------------
$ 1,171,293
===============
Liabilities and interest to Unitholders
Cash overdraft $ --
Redemptions payable --
Interest to Unitholders 1,171,293
---------------
$ 1,171,293
===============
Analyses of Net Assets
Interest of Unitholders ( 138,826 Units of fractional undivided interest outstanding)
Cost to original investors of 220,326 Units (note 1) $ 2,358,812
Less initial underwriting commission (note 3) 129,776
---------------
2,229,036
Less redemption of 81,500 Units 598,696
---------------
1,630,340
Undistributed net investment income
Net investment income 26,987
Less distributions to Unitholders 9,870
---------------
17,117
Realized gain (loss) on Security sale (193,548)
Unrealized appreciation (depreciation) of Securities (note 2) (247,463)
Distributions to Unitholders of Security sale proceeds --
Deferred sales charge (35,153)
---------------
Net asset value to Unitholders $ 1,171,293
===============
Net asset value per Unit ( 138,826 Units outstanding) $ 8.44
===============
The accompanying notes are an integral part of these statements.
INFRASTRUCTURE AND UTILITIES GROWTH TRUST, SERIES 1
Statement of Operations
Period from December 18, 1997 (date of deposit) through October 31, 1998
1998
-----------
Investment income
Dividend income..................................................................................... $ 29,022
Expenses
Trustee fees and expenses........................................................................ 1,212
Evaluator fees................................................................................... 255
Supervisory fees................................................................................. 568
-----------
Total expenses................................................................................ 2,035
-----------
Net investment income............................................................................ 26,987
Realized gain (loss) for Securities sale
Proceeds............................................................................................ 638,744
Cost................................................................................................ 832,292
-----------
Realized gain (loss)............................................................................. (193,548)
Net change in unrealized appreciation (depreciation) of Securities..................................... (247,463)
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................................. $ (414,024)
===========
Statement of Changes in Net
Assets Period from December 18, 1997 (date of
deposit) through October 31, 1998
1998
-----------
Increase (decrease) in net assets Operations:
Net investment income............................................................................... $ 26,987
Realized gain (loss) on Securities.................................................................. (193,548)
Net change in unrealized appreciation (depreciation) of Securities.................................. (247,463)
-----------
Net increase (decrease) in net assets resulting from operations.................................. (414,024)
Distributions to Unitholders from:
Net investment income............................................................................... (9,870)
Security sale proceeds.............................................................................. --
Redemption of Units.................................................................................... (598,696)
Deferred Sales Charge............................................................................ (35,153)
-----------
Total increase (decrease)........................................................................ (1,057,743)
Net asset value to Unitholders
Beginning of period................................................................................. 144,828
Additional Securities purchased from proceeds of Unit Sales......................................... 2,084,208
-----------
End of period (including undistributed net investment income of $17,117)............................ $ 1,171,293
===========
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
<CAPTION>
INFRASTRUCTURE AND UTILITIES GROWTH TRUST, SERIES 1 PORTFOLIO as of OCTOBER 31, 1998
- ----------------------------------------------------------------------------------------------------------------------
Valuation of
Number Market Value Securities
of Shares Name of Issuer Per Share (Note 1)
- --------------- ------------------------------------------------------------------------------------ ---------------
<S> <C> <C> <C>
799 ABB AB $ 105.0000 $ 83,895
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7,975 AO Mosenergo 2.2000 17,545
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11,290 BAA Plc 11.2700 127,238
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37,505 Cheung Kong Infrastructure 2.5435 95,397
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1,714 CSX Corporation 39.2500 67,274
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3,225 Enersis S.A. 20.8750 67,322
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4,065 Huaneng Power International, Incorporated 13.7500 55,894
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42,406 New World Infrastructure 1.4267 60,502
- ----------------------------------------------------------------------------------------------------------------------
3,865 Southern Company 28.1875 108,945
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1,088 Telecomunicacoes Brasileiras S.A. 75.9375 82,620
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2,703 Telefonica de Argentina S.A. 33.0625 89,368
- ----------------------------------------------------------------------------------------------------------------------
12,754 Transportacion Maritima Mexicana S.A. 4.4375 56,596
- ----------------------------------------------------------------------------------------------------------------------
1,417 Veba AG 55.7500 78,998
- ----------------------------------------------------------------------------------------------------------------------
3,548 Vivendi 45.7400 162,285
- ----------------------------------------------------------------------------------------------------------------------
134,354 $ 1,153,879
=============== ===============
</TABLE>
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The accompanying notes are an integral part of these statements.
INFRASTRUCTURE AND UTILITIES GROWTH TRUST, SERIES 1
Notes to Financial Statements
October 31, 1998
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation - Securities listed on a national or foreign securities
exchange are valued at the last closing sales price or, if no such price exists,
or if the Equity Securities are not listed at the closing bid price thereof. The
aggregate value of securities in the Trust is based on U.S. dollar value of the
foreign securities based on the related currency exchange rate at Evaluation
Time.
Security Cost - The original cost to the Trust of the Securities was based,
for Securities listed on a national or foreign exchange on the closing sale
prices on the exchange. The cost was determined on the day of the various Dates
of Deposit.
Unit Valuation - The redemption price per Unit is the pro rata share of each
Unit based upon (1) the cash on hand in the Trust or monies in the process of
being collected, (2) the Securities in the Trust based on the value as described
in Note 1 and (3) accumulated dividends thereon, less accrued expenses of the
Trust, if any.
Federal Income Taxes - Each Unitholder is considered to be the owner of a pro
rata portion of the trust and, accordingly, no provision has been made for
Federal Income Taxes.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.
NOTE 2 - PORTFOLIO
Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at October 31, 1998 is as follows:
Unrealized Appreciation $ 37,189
Unrealized Depreciation (284,652)
--------------
$ (247,463)
==============
NOTE 3- OTHER
Marketability - Although it is not obligated to do so, the Managing
Underwriter intends to maintain a market for Units and to continuously offer to
purchase Units at prices, subject to change at any time, based upon the value of
the Securities in the portfolio of the Trust valued as described in Note 1, plus
accumulated dividends to the date of settlement. If the supply of Units exceeds
demand, or for other business reasons, the Managing Underwriter may discontinue
purchases of Units at such prices. In the event that a market is not maintained
for the Units, a Unitholder desiring to dispose of his Units may be able to do
so only by tendering such Units to the Trustee for redemption at the redemption
price.
Cost to Investors - The cost to original investors was based on the
underlying value of the Securities per Unit on the date of an investor's
purchase, plus an amount equal to the difference between maximum sales charge of
5.5% of the public offering price which is equivalent to 5.820% of the aggregate
underlying value of the Securities and the maximum deferred sales charge of
($0.30 per Unit). These investors paid a deferred sales charge of $0.30 per
Unit. Effective on each December 18, commencing December 18, 1998, the secondary
sales charge does not include deferred payments but will instead include only a
one-time initial sales charge of 5.0% of the Public Offering Price and will
decrease by .5 of 1% to a minimum sales charge of 3.0%.
Compensation of Evaluator and Supervisor - The Supervisor receives a fee for
providing portfolio supervisory services for the Trust ($.007 per Unit, not to
exceed the aggregate cost of the Supervisor for providing such services to all
applicable Trusts). The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio. Both fees may be adjusted for increases under
the category "All Services Less Rent of Shelter" in the Consumer Price Index.
NOTE 4 - REDEMPTION OF UNITS
During the period ended October 31, 1998, 81,500 Units were presented for
redemption.
<PAGE>
International Assets Advisory Corp.
Global Passport Series
Infrastructure and Utilities Growth Trust, Series 1
Prospectus Part Two
Units are not deposits or obligations of any bank or
government agency and are not guaranteed.
This prospectus contains two parts.
No one may use this Prospectus Part Two unless accompanied by
Prospectus Part One.
- --------------------------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved
of the Trust
units or passed upon the adequacy or accuracy of this prospectus.
Any contrary representation is a criminal offense.
<PAGE>
THE TRUST
- --------------------------------------------------------------------------------
Van Kampen American Capital Equity Opportunity Trust, Series 84, which is
comprised of one unit investment trust, Infrastructure and Utilities Growth
Trust, Series 1, was created under the laws of the State of New York pursuant to
a Trust Indenture and Trust Agreement (the "Trust Agreement"), dated the Initial
Date of Deposit, among Van Kampen Funds Inc., as Sponsor, Global Assets
Advisors, Inc., as Supervisor, The Bank of New York, as Trustee, and American
Portfolio Evaluation Services, a division of Van Kampen Investment Advisory
Corp., as Evaluator or their predecessors.
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a portfolio of equity securities issued by companies
which International Assets Advisory Corp. believes have substantial present or
future opportunities in the infrastructure development and utility industries.
On the Initial Date of Deposit, the Sponsor deposited the Securities with the
Trustee, 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 the Units of the Trust.
Unless terminated earlier, the Trust will terminate on the Mandatory Termination
Date set forth under "Summary of Essential Financial Information" in Part One
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.
Additional Units of the Trust may be issued at any time by depositing in the
Trust (i) additional Securities, (ii) contracts to purchase securities together
with cash or irrevocable letters of credit or (iii) cash (or a letter of credit)
with instructions to purchase additional Securities. As additional Units are
issued by the Trust as a result of the deposit of additional Securities, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust 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 Trust 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 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 the Trust on the
Initial, or any subsequent, Date of Deposit. Existing and new investors may
experience a dilution of their investments and a reduction in their anticipated
income because of fluctuations in the prices of the Securities between the time
of the cash deposit and the purchase of the Securities and because the Trust
will pay the associated brokerage fees.
Each Unit of the Trust initially offered represents an undivided interest in
the 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 the Trust represented by
each unredeemed Unit will increase or decrease accordingly, although the actual
interest in the 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 the Managing Underwriter, or until
the termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
- --------------------------------------------------------------------------------
The objective of the Trust is to provide the potential for above-average
total return primarily through potential capital appreciation with dividend
income playing a secondary role. There is, of course, no assurance that the
Trust (which includes expenses and sales charges) will achieve its objective.
The Equity Securities selected for deposit in the Trust were chosen by
International Assets Advisory Corporation ("IAAC" ), the Managing Underwriter.
In selecting the Securities, IAAC considered a wide range of financial measures
and performance characteristics including, but not limited to, strength of
industry position, planned production and sales growth, past profitability,
market liquidity and potential for capital appreciation. The Trust seeks to
benefit from foreign and domestic issuers which IAAC believes have substantial
present or future opportunities in the infrastructure and utility industries.
These issuers fall into several categories including public utilities, public
works and transportation sectors. Infrastructure issuers are involved in
businesses that provide underlying services and structures which support modern
civilized life and help to fuel global expansion. While achievement of the
Trust's objective depends on continued expansion and economic development in
emerging markets throughout the world, IAAC believes that the market for
infrastructure-related services and products remains significant, may offer
significant growth, may allow for global diversification and that infrastructure
companies and related firms may offer the potential for steady and expanding
revenues and earnings streams.
IAAC believes that the expansion of economic freedom and property rights
coupled with a reduction in the role of government in certain countries has
generated a world growth rate which is significantly higher than that achieved
in the past two decades. This increase has occurred, in part, by new investment
in infrastructure and deregulation and privatization of state-run industries
which has opened investment to the industrialized world. Direct investment from
"rich" countries to developing countries and private capital flows have risen
significantly in recent years. There can be no assurance that continued growth
will occur or that future investment growth will result in achievement of the
Trust objective.
The Trust is exposed to both emerging and developed markets around the globe.
Although the portfolio contains securities of companies within infrastructure
and utility industries which may be of high risk, when added to a portfolio of
global investments, the Trust may help provide a more diversified overall
investment portfolio and may offer the potential to help reduce overall
portfolio risk. See "Risk Factors" for a discussion of certain risks, including
the risks related to infrastructure companies, developing country expansion and
foreign securities.
General. Investors will be subject to taxation on the dividend income
received by the Trust and on gains from the sale or liquidation of Securities.
Investors should be aware that there is not any guarantee that the objective of
the Trust 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. In addition, a decrease in the value of the foreign currencies
relative to the U.S. dollar will adversely affect the value of the Trust's
assets and income and the value of the Units of the Trust. See "Risk Factors."
Investors should note that the above criteria was applied to the Securities
for inclusion in the Trust as of the Initial Date of Deposit. Subsequent to the
Initial Date of Deposit, the Securities may no longer meet the above criteria.
Should a Security no longer meet the criteria originally established for
inclusion in the Trust, such Security will not as a result thereof be removed
from the Trust portfolio.
Investors should be aware that the Trust is not a "managed" fund and as a
result the adverse financial condition of a company will not result in its
elimination from the 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. The Trust may continue to hold Securities
even though the evaluation of the attractiveness of the Securities may have
changed and, if the evaluation were performed again at that time, the Securities
would not be selected for the Trust.
TRUST PORTFOLIO
- --------------------------------------------------------------------------------
The Trust consists of common stocks of companies that International Assets
Advisory Corp. believes have substantial present or future opportunities in the
infrastructure development and utility industries. All of the Equity Securities
are listed on a national or foreign securities exchange, the NASDAQ National
Market or are traded in the over-the-counter market. Each of the Securities was
selected by the Managing Underwriter based upon those factors referred to under
"Objectives and Securities Selection" above.
The Trust consists of (a) the Equity Securities (including contracts for the
purchase thereof) listed under "Portfolio" in Part One as may continue to be
held from time to time in the Trust, (b) any additional Equity Securities
acquired and held by the Trust pursuant to the provisions of the Trust Agreement
and (c) any cash held in the Income and Capital Accounts. Neither the Sponsor
nor the Trustee shall be liable in any way for any failure in any of the 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.
Investors should note that the above criteria was applied to the Equity
Securities selected by the Managing Underwriter for inclusion in the Trust
portfolio as of the date indicated above. Since the Sponsor may deposit
additional Equity Securities which were originally selected through this
process, the Sponsor and Managing Underwriter may continue to sell Units of the
Trust even though the Equity Securities would no longer be chosen for deposit
into the Trust if the selection process were to be made again at a later time.
RISK FACTORS
- --------------------------------------------------------------------------------
General. An investment in Units of the Trust should be made with an
understanding of the risks which an investment in common stocks of foreign
issuers 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 Trust 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 the portfolio may be expected to
fluctuate over the life of the Trust 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 or foreign
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 Trust may be restricted under the Investment
Company Act of 1940 from selling Equity Securities to the Sponsor or the
Managing Underwriter. The price at which the Equity Securities may be sold to
meet redemption, and the value of the Trust, will be adversely affected if
trading markets for the Equity Securities are limited or absent.
Unitholders will be unable to dispose of any of the Equity Securities in the
Trust, 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 Trust and will vote such stocks in accordance with the
instructions of the Sponsor (who may rely on the Supervisor). In the absence of
any such instructions, the Trustee will vote such Securities so as to insure
that the Securities are voted as closely as possible in the same manner and the
same general proportion as are shares held by owners other than the Trust.
Foreign Equity Risks. Since the Equity Securities consist of securities of
foreign issuers (certain of which may be held in American Depositary Receipt
form), an investment in the Trust involves certain investment risks that are
different in some respects from an investment in a trust which invests entirely
in the securities of domestic issuers. These investment risks include future
political or governmental restrictions which might adversely affect the payment
or receipt of payment of dividends on the relevant Equity Securities, the
possibility that the financial condition of the issuers of the Equity Securities
may become impaired or that the general condition of the relevant stock market
may worsen (both of which would contribute directly to a decrease in the value
of the Equity Securities and thus in the value of the Units), the limited
liquidity and relatively small market capitalization of the relevant securities
market, expropriation or confiscatory taxation, economic uncertainties and
foreign currency devaluations and fluctuations. In addition, for foreign issuers
that are not subject to the reporting requirements of the Securities Exchange
Act of 1934, there may be less publicly available information than is available
from a domestic issuer. Also, foreign issuers are not necessarily subject to
uniform accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic issuers. The securities
of many foreign issuers are less liquid and their prices more volatile than
securities of comparable domestic issuers. In addition, fixed brokerage
commissions and other transaction costs on foreign securities exchanges are
generally higher than in the United States and there is generally less
government supervision and regulation of exchanges, brokers and issuers in
foreign countries than there is in the United States. However, due to the nature
of the issuers of the Equity Securities, the Sponsor believes that adequate
information will be available to allow the Supervisor to provide portfolio
surveillance for the Trust.
Equity securities issued by non-U.S. issuers generally pay dividends in
foreign currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the United States dollar value of these securities will
vary with fluctuations in the U.S. dollar foreign exchange rates for the various
Equity Securities. See "Exchange Rate" below. Investors should also realize
that, although certain Equity Securities are ADRs, all foreign issuers which
operate internationally are subject to currency risks.
The securities of certain foreign issuers in the Trust are in ADR form
(including Global Depositary Receipts). ADRs evidence American Depositary
Receipts which represent common stock deposited with a custodian in a
depositary. American Depositary Shares, and receipts therefor (ADRs), are issued
by an American bank or trust company to evidence ownership of underlying
securities issued by a foreign corporation. These instruments may not
necessarily be denominated in the same currency as the securities into which
they may be converted. For purposes of the discussion herein, the term ADR
generally includes American Depositary Shares. ADRs may be sponsored or
unsponsored. In an unsponsored facility, the depositary initiates and arranges
the facility at the request of market makers and acts as agent for the ADR
holder, while the company itself is not involved in the transaction. In a
sponsored facility, the issuing company initiates the facility and agrees to pay
certain administrative and shareholder-related expenses. Sponsored facilities
use a single depositary and entail a contractual relationship between the
issuer, the shareholder and the depositary; unsponsored facilities involve
several depositaries with no contractual relationship to the company. The
depositary bank that issues an ADR generally charges a fee, based on the price
of the ADR, upon issuance and cancellation of the ADR. This fee would be in
addition to the brokerage commissions paid upon the acquisition or surrender of
the security. In addition, the depositary bank incurs expenses in connection
with the conversion of dividends or other cash distributions paid in local
currency into U.S. dollars and such expenses are deducted from the amount of the
dividend or distribution paid to holders, resulting in a lower payout per
underlying shares represented by the ADR than would be the case if the
underlying share were held directly. The Trustee for this Trust acts as a
depositary for ADRs, certain of which may be included in the Trust's portfolio.
Certain tax considerations, including tax rate differentials and withholding
requirements, arising from applications of the tax laws of one nation to
nationals of another and from certain practices in the ADR market may also exist
with respect to certain ADRs. In varying degrees, any or all of these factors
may affect the value of the ADR compared with the value of the underlying shares
in the local market. In addition, the rights of holders of ADRs may be different
than those of holders of the underlying shares, and the market for ADRs may be
less liquid than that for the underlying shares. ADRs are registered securities
pursuant to the Securities Act of 1933 and may be subject to the reporting
requirements of the Securities Exchange Act of 1934.
On the basis of the best information available at the present time, none of
the Equity Securities are subject to exchange control restrictions under
existing law which would materially interfere with payment to the Trust of
dividends due on, or proceeds from the sale of, the Equity Securities. However,
there can be no assurance that exchange control regulations might not be adopted
in the future which might adversely affect payment to the Trust. In addition,
the adoption of exchange control regulations and other legal restrictions could
have an adverse impact on the marketability of international securities in the
Trust and on the ability of the Trust to satisfy its obligation to redeem Units
tendered to the Trustee for redemption.
Investors should be aware that it may not be possible to buy all of the
Equity Securities at the same time because of the unavailability of any Equity
Security, and restrictions applicable to the Trust relating to the purchase of
an Equity Security by reason of the federal securities laws or otherwise.
Foreign securities generally have not been registered under the Securities
Act of 1933 and may not be exempt from the registration requirements of such
Act. Sales of non-exempt Equity Securities by the Trust in the United States
securities markets are subject to severe restrictions and may not be
practicable. Accordingly, sales of these Equity Securities by the Trust will
generally be effected only in foreign securities markets. Although the Managing
Underwriter does not believe that the Trust will encounter obstacles in
disposing of the Equity Securities, investors should realize that the Equity
Securities may be traded in foreign countries where the securities markets are
not as developed or efficient and may not be as liquid as those in the United
States. The value of the Equity Securities will be adversely affected if trading
markets for the Equity Securities are limited or absent.
Foreign Currencies. The Trust also involves the risk that fluctuations in
exchange rates between the U.S. dollar and foreign currencies may negatively
affect the value of the stocks. For example, if a foreign stock rose 10% in
price but the U.S. dollar gained 5% against the related foreign currency, a U.S.
investor's return would be reduced to about 5%. This is because the foreign
currency would "buy" fewer dollars or, conversely, a dollar would buy more of
the foreign currency. Many foreign currencies have fluctuated widely against the
U.S. dollar for a variety of reasons such as supply and demand of the currency,
investor perceptions of world or country economies, political instability,
currency speculation by institutional investors, changes in government policies,
buying and selling of currencies by central banks of countries, trade balances
and changes in interest rates. A Trust's foreign currency transactions will be
conducted with foreign exchange dealers acting as principals on a spot (i.e.,
cash) buying basis. These dealers realize a profit based on the difference
between the price at which they buy the currency (bid price) and the price at
which they sell the currency (offer price). The Evaluator will estimate the
currency exchange rates based on current activity in the related currency
exchange markets, however, due to the volatility of the markets and other
factors, the estimated rates may not be indicative of the rate a Trust might
obtain had the Trustee sold the currency in the market at that time.
Infrastructure Issuers. The Trust seeks to benefit from development of
infrastructure due to expansion and economic growth in developing countries.
Many of these countries are characterized by political and economic uncertainty
and instability. These countries have historically experienced high rates of
inflation, high interest rates, exchange rate fluctuations, trade difficulties
and high poverty and unemployment rates. In many cases, governments in
developing countries exercise a significant degree of control over the economy
and trade. All of these factors could adversely impact the demand for the
products and services offered by the issuers of the Securities which could
adversely affect the value of the Securities. An investment in Units of the
Trust should be made with an understanding of the characteristics of the utility
industry and the risks which such an investment may entail. General problems of
such issuers include the difficulty in financing large construction programs in
an inflationary period, the limitations on operations and increased costs and
delays attributable to environmental considerations, the difficulty of the
capital market in absorbing utility debt, the difficulty in obtaining fuel at
reasonable prices and the effect of energy conservation. All of such issuers
have been experiencing certain of these problems in varying degrees. In
addition, governmental authorities may from time to time review existing, and
impose additional, regulations governing the licensing, construction and
operation of nuclear power plants, which may adversely affect the ability of the
issuers of certain of the Securities in the portfolio to make payments of
dividends on such Securities.
Utilities are generally subject to extensive regulation by government utility
commissions which, for example, establish the rates which may be charged and the
appropriate rate of return on an approved asset base, which must be approved by
the commissions. Certain utilities have had difficulty from time to time in
persuading regulators, who are subject to political pressures, to grant rate
increases necessary to maintain an adequate return on investment and voters in
certain countries may have the ability to impose limits on rate adjustments (for
example, by initiative or referendum). Any unexpected limitations could
negatively affect the profitability of utilities whose budgets are planned far
in advance. In addition, gas pipeline and distribution companies have had
difficulties in adjusting to short and surplus energy supplies, enforcing or
being required to comply with long-term contracts and avoiding litigation from
their customers, on the one hand, or suppliers, on the other.
Certain of the issuers of the Securities in the Trust may own or operate
nuclear generating facilities. Governmental authorities may from time to time
review existing, and impose additional, requirements governing the licensing,
construction and operation of nuclear power plants. Nuclear generating projects
in the electric utility industry have experienced substantial cost increases,
construction delays and licensing difficulties. These have been caused by
various factors, including inflation, high financing costs, required design
changes and network, allegedly faulty construction, objections by groups and
governmental officials, limits on the ability to finance, reduced forecasts of
energy requirements and economic conditions. This experience indicates that the
risk of significant cost increases, delays and licensing difficulties remains
present through to completion and achievement of commercial operation of any
nuclear project. Also, nuclear generating units in service have experienced
unplanned outages or extensions of scheduled outages due to equipment problems
or new regulatory requirements sometimes followed by a significant delay in
obtaining regulatory approval to return to service. A major accident at a
nuclear plant anywhere, such as the accident at a plant in Chernobyl, could
cause the imposition of limits or prohibitions on the operation, construction or
licensing of nuclear units.
Other general problems of the gas, water, telephone and electric utility
industry include difficulty in obtaining timely and adequate rate increases,
difficulty in financing large construction programs to provide new or
replacement facilities during an inflationary period, rising costs of rail
transportation to transport fossil fuels, the uncertainty of transmission
service costs, changes in tax laws which adversely affect a utility's ability to
operate profitably, increased competition in service costs, recent reductions in
estimates of future demand for electricity and gas, restrictions on operations
and increased cost and delays attributable to environmental considerations,
uncertain availability and increased cost of capital, unavailability of fuel for
electric generation at reasonable prices, including the steady rise in fuel
costs and the costs associated with conversion to alternate fuel sources such as
coal, availability and cost of natural gas for resale, technical and cost
factors and other problems associated with construction, licensing, regulation
and operation of nuclear facilities for electric generation, including among
other considerations the problems associated with the use of radioactive
materials and the disposal of radioactive wastes, and the effects of energy
conservation.
Certain of the Securities are issued by companies engaged in
transportation-related industries such as railways, airports, shipping,
tollroads, bridges and port facilities. Revenues of these issuers are generally
derived from user fees from ports, tolls on tollroads and bridges, rents from
buildings such as terminals and service fees. From time to time these issuers
have experienced significant variations in earnings and traffic due to increased
competition, excess capacity, increased costs, deregulation, traffic
constraints, scarcity and cost of fuel and other factors. These issuers may face
significant risk of losses related to mechanical failure of vessels, collisions,
vessel loss or damage, cargo loss or damage, labor strikes, and shipment of
hazardous materials. These issuers often face significant government regulation
relating to environmental protection, rate setting, licensing and safety. All of
these factors could have a material adverse impact revenues of these issuers.
Year 2000 Readiness Disclosure. These two paragraphs constitute "Year 2000
Readiness Disclosure" within the meaning of the Year 2000 Information and
Readiness Disclosure Act of 1998. If computer systems used by the Sponsor,
Evaluator, Supervisor, Trustee or other service providers to the Trust do not
properly process date-related information after December 31, 1999, the resulting
difficulties could adversely impact the Trust. This is commonly known as the
"Year 2000 Problem." The Sponsor, Evaluator, Supervisor and Trustee are taking
steps to address this problem and to obtain reasonable assurances that other
service providers to the Trust are taking comparable steps. We cannot guarantee
that these steps will be sufficient to avoid any adverse impact on the Trust.
This problem may impact corporations to varying degrees based on factors such as
industry sector and degree of technological sophistication. We cannot predict
what impact, if any, this problem will have on the issuers of the Securities.
In addition, computer failures throughout the financial services industry
beginning January 1, 2000 could have a detrimental effect on the markets for the
Securities. Improperly functioning trading systems may result in settlement
problems and liquidity issues. Moreover, corporate and governmental data
processing errors may adversely affect issuers and overall economic
uncertainties. Remediation costs will affect the earnings of individual issuers.
These costs could be substantial. Issuers may report these costs inconsistently
in U.S. and foreign financial markets. All of these issues could adversely
affect the Securities and the Trust.
TAXATION
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The following is a general discussion of certain of the federal income tax
consequences of the purchase, ownership and disposition of the Units of the
Trust. The summary is limited to investors who hold the Units as "capital
assets" (generally, property held for investment within the meaning of Section
1221 of the Internal Revenue Code of 1986 (the "Code")). Unitholders should
consult their tax advisers in determining the federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units in
the Trust. For purposes of the following discussion and opinion, it is assumed
that each Security is equity for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of 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 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 automati cally reinvested.
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 the date the Unitholder purchase his Units) in order to determine his
initial tax basis for his pro rata portion of each Security held by the Trust.
Unitholders should consult their own tax advisers with regard to calculation of
basis. For federal income tax purposes, a Unitholder's pro rata portion of
dividends as defined by Section 316 of the Code paid by a corporation with
respect to an Security held by the Trust are 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 exceeds
such current and accumulated earnings and profits will first reduce a
Unitholder's tax basis in such Security, and to the extent that such dividends
exceed a Unitholder's tax basis in such Security shall generally be treated as
capital gain. In general, the holding period for such capital gain will be
determined by the period of time a Unitholder has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain, except in the case of a dealer or a financial
institution. A Unitholder's portion of loss, if any, upon the sale or redemption
of Units or the disposition of Securities held by the Trust will generally be
considered a capital loss (except in the case of a dealer or a financial
institution).
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
Unitholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Final regulations have
been issued which address special rules that must be considered in determining
whether the 46 day holding 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.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations. 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 an Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. The Internal Revenue Service Restructuring and
Reform Act of 1998 (the "1998 Tax Act") provides that for taxpayers other than
corporations, net capital gain (which is defined as net long-term capital gain
over net short-term capital loss for the taxable year) realized from property
(with certain exclusions) is subject to a maximum marginal stated tax rate of
20% (10% in the case of certain taxpayers in the lowest tax bracket). Capital
gain or loss is long-term if the holding period for the asset is more than one
year, and is short-term if the holding period for the asset is one year or less.
The date on which a Unit is acquired (i.e., the "trade date") is excluded for
purposes for determining the holding period of the Unit. Capital gains realized
from assets held for one year or less are taxed at the same rates as ordinary
income.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust including his pro rata
portion of all Securities represented by a Unit.
The Taxpayer Relief Act of 1997 (the "1997 Act") includes provisions that
treat certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts or similar transactions) as constructive
sales for purposes of recognition of gain (but not of loss) and for purposes of
determining the holding period. Unitholders should consult their own tax
advisers with regard to any such constructive sales rules.
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 of 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 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.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unitholders and derived from dividends of foreign corporations will not be
subject to U.S. withholding tax provided that less than 25 percent of the gross
income of the foreign corporations for a three-year period ending with the close
of its taxable year preceding payment was not effectively connected to the
conduct of a trade or business within the United States. In addition, such
earnings may be exempt from U.S. withholding pursuant to a specific treaty
between the United States and a foreign country. Non-U.S. Unitholders should
consult their own tax advisers regarding the imposition of U.S. withholding on
distributions from the Trust.
It should be noted that payments to the Trust of dividends on Securities that
are attributable to foreign corporations may be subject to foreign withholding
taxes and Unitholders should consult their tax advisers regarding the potential
tax consequences relating to the payment of any such withholding taxes by the
Trust. Any dividends withheld as a result thereof will nevertheless be treated
as income to the Unitholders. Because, under the grantor trust rules, an
investor is deemed to have paid directly his share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect to such taxes.
The 1997 Act imposes a required holding period for such credits. Investors
should consult their tax advisers with respect to foreign withholding taxes and
foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder
of the Trust a statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security (resulting from redemption or the
sale of any Security), and the fees and expenses paid by the Trust. The Trustee
will also furnish annual information returns to Unitholders and to the Internal
Revenue Service.
In the opinion of 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.
Unitholders should consult their tax advisers regarding potential foreign, state
or local taxation with respect to the Units.
In addition, please note that capital gains may be recharacterized 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.
TRUST OPERATING EXPENSES
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Initial Costs. All costs and expenses incurred in creating and establishing
the Trust, including the cost of the initial preparation, printing and execution
of the Trust Agreement and the certificates, legal and accounting expenses,
advertising and selling expenses, expenses of the Trustee, initial fees of an
evaluator and other out-of-pocket expenses have been borne by the Sponsor at no
cost to the Fund.
Compensation of Sponsor, Evaluator and Supervisor. The Sponsor will not
receive any fees in connection with its activities relating to the Trust. Global
Assets Advisors, Inc. will receive an annual supervisory fee, payable in monthly
installments, which is not to exceed the amount set forth under "Summary of
Essential Financial Information" in Part One, for providing portfolio
supervisory services for the Trust. Such fee (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 case 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 this
Trust, but at no time will the total amount received for portfolio supervisory
services rendered to unit investment trusts for which the Supervisor acts as
principal underwriter and 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 Investment Advisory Corp., shall receive for
regularly providing evaluation services to the Trust the annual per Unit
evaluation fee, payable in monthly installments, set forth under "Summary of
Essential Financial Information" in Part One (which is based on the number of
Units of the Trust 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 of the Trust outstanding at the
end of the month of such calculation) for regularly evaluating the Trust
portfolio. The foregoing fees 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 and the Managing Underwriter will receive
sales commissions and the Managing Underwriter 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 Managing Underwriter
Compensation".
Trustee's Fee. For its services the Trustee will receive the annual per Unit
fee from the Trust set forth under "Summary of Essential Financial Information"
in Part One (which is based on the number of Units of the Trust outstanding on
January 1 of each year for which such compensation relates except during the
initial offering period in which case the calculation is based on the number of
Units outstanding at the end of the month of such calculation). The Trustee's
fees 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 to the Trust and the amounts earned by the Trustee are
retained by the Trustee. Part of the Trustee's compensation for its services to
the Trust is expected to result from the use of these funds. 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. The following additional charges are or may be
incurred by the 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) foreign custodial and transaction
fees, (h) accrual of costs associated with liquidating securities and (i)
expenditures incurred in contacting Unitholders upon termination of the Trust.
The Trust may pay the expenses of updating its registration statement. Sponsors
of unit investment trusts have historically paid these expenses. The expenses
set forth herein are payable as described under "General" below.
General. All of the fees and expenses of the Trust will accrue on a
daily basis and will be charged to the Trust, in arrears, on a monthly basis as
of the tenth day of each month. When such fees and expenses are paid by or owing
to the Trustee, they are secured by a lien on the Trust's portfolio. Since the
Equity Securities are all common stocks, and the income stream produced by
dividend payments is unpredictable, the Sponsor cannot provide any assurance
that dividends will be sufficient to meet any or all expenses of the Trust. If
the balances in the Income and Capital Accounts are insufficient to provide for
amounts payable by the Trust, the Trustee has the power to sell Equity
Securities to pay such amounts. These sales may result in capital gains or
losses to Unitholders. See "Taxation."
PUBLIC OFFERING
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General. Units are offered at the Public Offering Price. The Public Offering
Price is based on the aggregate underlying value of the Securities in the
Trust's portfolio, the sales charge, and cash, if any, in the Income and Capital
Accounts held or owned by the Trust. The sales charge is equal to the 5.00% of
the Public Offering Price and will reduce by 0.50% on each December 18 beginning
December 18, 1999. The aggregate underlying value of the Securities is based on
the U.S. dollar value of the Foreign Securities computed on the basis of the
related currency exchange rate expressed in U.S. dollars as of the Evaluation
Time. The sales charge applicable to quantity purchases is, during the initial
offering period and secondary market, reduced on a graduated basis to any person
acquiring 10,000 or more Units as follows:
Percentage Sales Charge
Aggregate Number of Units Purchased Reduction Per Unit
------------------------------------------------- -----------------------
10,000 - 24,000 .60%
26,000 - 49,999 .90
50,000 - 99,999 1.30
100,000 or more 2.10
The sales charge reduction will primarily be the responsibility of the
selling Managing Underwriter, broker, dealer or agent. A Unitholder who
purchases additional Units of the Trust may obtain a reduced sales charge
through a right of accumulation on current purchases of Units. The applicable
sales charge on such additional purchases will be determined based on the total
of (a) the number of Units currently purchased plus (b) the total number of
Units previously purchased. The following purchases may be aggregated for
purposes of determining the total number of Units purchased: (i) individual
purchases on behalf of a single purchaser, the purchaser's spouse and the
purchaser's children under the age of 21 years; (ii) purchases made by clients
of same registered investment advisor; (iii) purchases in connection with an
employee benefits plan exclusively for the benefit of such individuals, such as
an IRA, individual plan under Internal Revenue Code section 403(b) or a
single-participant Keogh-type plan; (iv) purchases made by a company controlled
by such individuals.
Registered representatives of the Managing Underwriter may purchase Units of
the Trust at the current Public Offering Price less the underwriting commission
during the initial offering period, and less the dealer's concession for
secondary market transactions. Registered representatives of selling brokers,
dealers, or agents may purchase Units of the Trust at the current Public
Offering Price less the dealer's concession during the initial offering period
and for secondary market transactions.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in Part One in
accordance with fluctuations in the prices of the underlying Securities in the
Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities in the Trust
an amount equal to the sales charge and dividing the sum so obtained by the
number of Units in the Trust outstanding. The Public Offering Price shall
include the proportionate share of any cash held in the Income and Capital
Accounts in the Trust. The Evaluator on each business day (except as stated
below) will appraise or cause to be appraised the value of the underlying
Securities in the Trust 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 close of
the New York Stock Exchange on each such day. Orders received by the Trustee or
Managing Underwriter for purchases, sales or redemptions after this time, or on
a day which is not a business day for the Trust, will be held until the next
determination of price. No such evaluation shall be made on any date on which
Securities representing greater than 33% of the aggregate value of the Trust are
not traded on the principal trading exchange for such Securities due to a
customary business holiday on such exchange. Accordingly, purchases or
redemptions of Units on such a day will be based on the next determination of
price of the Securities (and the price of such Units would be the next computed
price). The Managing Underwriter currently does not intend to maintain a
secondary market after June 18, 2004.
The value of the Equity Securities is determined on each business day by the
Evaluator in the following manner: if the Equity Securities are listed on a
national or foreign 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 it is determined that 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.
In offering the Units to the public, neither, the Managing Underwriter nor
any broker-dealers are recommending any of the individual Securities in the
Trust but rather the entire pool of Securities, taken as a whole, which are
represented by the Units.
Unit Distribution. Units will be distributed to the public by the Managing
Underwriter, 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.
It is the intention of the Sponsor to qualify Units of the Trust for sale in
a number of states. Sales will be made to any broker, dealer or bank at prices
which represent a concession or agency commission in connection with the
distribution of Units of 70% of the applicable sales charge. Resale of Units of
the Trust by such Managing Underwriter, dealers and others to the public will be
made at the Public Offering Price described in the then current prospectus.
Certain commercial banks are making Units of the Trust 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 500 Units (100 Units for a
tax-sheltered retirement plan). The Managing Underwriter 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 Managing Underwriter Compensation. The Managing Underwriter will
receive the gross sales commission equal to the sales charge. Any quantity
discount provided to investors will be borne by the Managing Underwriter or the
selling dealer or agent.
In addition, the Managing Underwriter 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 Managing Underwriter and the cost of such Securities
to the Trust on the Initial Date of Deposit as well as on subsequent deposits.
The Sponsor and Managing Underwriter have 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 portfolio. The Managing
Underwriter 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 in the Trust after a date of deposit, since all proceeds received
from purchasers of Units (excluding dealer concessions and agency commissions
allowed, if any) will be retained by the Managing Underwriter.
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 or
Managing Underwriter prior to the date of settlement for the purchase of Units
may be used in the Sponsor's or the Managing Underwriter's business and may be
deemed to be a benefit to the Sponsor or Managing Underwriter, subject to the
limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Managing Underwriter currently
intends to maintain a secondary market for Units of the Trust. In so maintaining
a market, the Managing Underwriter 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 Managing Underwriter or 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 Managing
Underwriter currently intends to maintain a market for the Units offered hereby
and offer continuously to purchase Units at prices, subject to change at any
time, based upon the aggregate underlying value of the Equity Securities in the
Trust (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 Managing Underwriter 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.
Tax-Sheltered Retirement Plans. Units of the Trust are available for
purchase in connection with certain types of tax-sheltered retirement plans,
including Individual Retirement Accounts for 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 of the Trust may be limited by the plans' provisions and does not
itself establish such plans. The minimum purchase in connection with a
tax-sheltered retirement plan is 100 Units.
RIGHTS OF UNITHOLDERS
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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 of the Trust will be evidenced by book entry unless a
Unitholder or the Unitholder's registered broker-dealer makes a written request
to the Trustee that ownership be evidenced by certificates. 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 the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account of the Trust. Other receipts (e.g., capital gains, proceeds from
the sale of Securities, etc.) are credited to the Capital Account of the Trust.
The Trustee will distribute any net income received with respect to any of
the Securities in the Trust on or about the Income Distribution Dates to
Unitholders of record on the preceding Income Record Dates. See "Summary of
Essential Financial Information"in Part One. Proceeds received on the sale of
any Securities in the Trust, to the extent not used to meet redemptions of Units
or pay expenses, will be distributed annually 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 of the Trust and not distributed until the next distribution
date applicable to the 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 after deducting
estimated expenses. Because dividends are not received by the Trust at a
constant rate throughout the year, such distributions to Unitholders are
expected to fluctuate 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.
As of the tenth day of each month, the Trustee will deduct from the Income
Account and, to the extent funds are not sufficient therein, from the Capital
Account of the Trust amounts necessary to pay the expenses of the Trust (as
determined on the basis set forth under "Trust Operating Expenses"). The Trustee
also may withdraw from said accounts such amounts, if any, as it deems necessary
to establish a reserve for any governmental charges payable out of the Trust.
Amounts so withdrawn shall not be considered a part of the Trust's assets until
such time as the Trustee shall return all or any part of such amounts to the
appropriate accounts. In addition, the Trustee may withdraw from the Income and
Capital Accounts of the Trust such amounts as may be necessary to cover
redemptions of Units.
Reinvestment Option. Unitholders of the Trust may elect to have each
distribution of income, capital gains and/or capital on their Units
automatically reinvested in additional Units of the Trust subject to the
remaining deferred sales charge payments due on Units, if any, pursuant to the
"Automatic Reinvestment Option" (to the extent Units may be lawfully offered for
sale in the state in which the Unitholder resides). To participate in the
reinvestment plan, a Unitholder may either contact his or her broker or agent or
file with the Trustee a written notice of election at least five days prior to
the Record Date for which the first distribution is to apply. A Unitholder's
election to participate in the reinvestment plan will apply to all Units of the
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 Managing Underwriter only (see "Public Offering--Public
Market"). 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 subject to any remaining deferred sales charge based on the net asset value
for Units of the Trust as of the Evaluation Time on the related 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 of the Trust and will send such Unitholder a statement
reflecting the reinvestment.
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 Managing Underwriter and Sponsor shall have the right to
suspend or terminate the reinvestment plan at any time.
Reports Provided. The Trustee shall furnish Unitholders of the Trust 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 of the Trust 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
the 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 such Trust and the number
of Units of the Trust outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit of the Trust 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 of
the Trust, 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. No later than
seven calendar days following such tender the Unitholder will be entitled to
receive in cash an amount for each Unit equal to the Redemption Price per Unit
next computed after receipt by the Trustee of such tender of Units and converted
into U.S. dollars as of the Evaluation Time set forth under " Summary of
Essential Financial Information" in Part One. The "date of tender" is deemed to
be the date of the next computation of the net asset value per Unit after Units
are received by the Trustee for redemption. No such computation shall be made on
any day on which Securities representing greater than 33% of the aggregate value
of the Trust are not traded on the principal trading exchange for such
Securities due to a customary business holiday on such exchange. Accordingly,
purchases or redemptions of Units on such a day will be based on the next
determination of price of the Securities (and the price of such Units would be
the next computed price). Foreign securities exchanges are open for trading on
certain days which are U.S. holidays on which the Trust will not transact
business. The Foreign Securities will continue to trade on those days and thus
the value of the Trust may be significantly affected on days when a Unitholder
cannot sell or redeem his Units.
The Trustee is empowered to sell Securities of the Trust in order to make
funds available for redemption if funds are not otherwise available in the
Capital and Income Accounts of the Trust 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.
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 in the Trust, plus or minus cash, if any, in the
Income and Capital Accounts of the Trust (net of applicable commissions,
exchange fees and stamp taxes). On the Initial Date of Deposit, the Public
Offering Price per Unit (which includes the sales charge) exceeded the values at
which Units could have been redeemed by the amounts shown under "Summary of
Essential Financial Information" in Part One. The Redemption Price per Unit is
the pro rata share of each Unit in the Trust determined on the basis of (i) the
cash on hand in the Trust, (ii) the value of the Securities in the Trust and
(iii) dividends receivable on the Equity Securities of the Trust 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 Trust in the following manner: if the Equity Securities are
listed on a national or foreign 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 of such Trust on the bid side of the market or (c) by any combination
of the above. The value of the Equity Securities is based on the aggregate value
of the Foreign Securities computed on the basis of the applicable currency
exchange rate expressed in U.S. dollars as of the Evaluation Time.
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
in the Trust is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
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Managing Underwriter Purchases of Units. The Trustee shall notify the
Managing Underwriter of any Units tendered for redemption. If the Managing
Underwriter'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 Managing
Underwriter may be tendered to the Trustee for redemption as any other Units.
The offering price of any Units acquired by the Managing Underwriter 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 Managing Underwriter which likewise will bear
any loss resulting from a lower offering or redemption price subsequent to its
acquisition of such Units.
Portfolio Administration. The portfolio of the Trust is 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.
While the Trust will not be managed, the Trust Agreement does provide 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 the 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 the Trust, they may be accepted for deposit
in the Trust and either sold by the Trustee or held in the 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 the Trust in exchange for Equity Securities) are credited to the
Capital Account for distribution to Unitholders or to meet redemptions. Except
as stated under "Trust Portfolio" for failed securities and as provided in this
paragraph, the acquisition by the 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 of the Trust tendered for redemption and the payment of expenses.
When the Trust sells Securities, the composition and diversity of the Equity
Securities in the Trust may be altered. In order to obtain the best price for
the 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. In
effecting purchases and sales of a Trust's portfolio securities, the Sponsor may
direct that orders be placed with and brokerage commissions be paid to brokers,
including brokers which may be affiliated with the Trust, the Sponsor or dealers
participating in the offering of Units. In addition, in selecting among firms to
handle a particular transaction, the Sponsor may take into account whether the
firm has sold or is selling units of unit investment trusts which it sponsors.
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 the Trust then outstanding, provided that no
such amendment or waiver will reduce the interest in the 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.
The Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of the Trust then outstanding, or by the
Trustee when the value of the Equity Securities owned by the Trust, as shown by
any evaluation, is less than that amount set forth under Minimum Termination
Value in "Summary of Essential Financial Information" in Part One. The Trust
will be liquidated by the Trustee in the event that a sufficient number of Units
of the Trust not yet sold are tendered for redemption by the Managing
Underwriter or the Sponsor so that the net worth of the Trust would be reduced
to less than 40% of the value of the Securities at the time they were deposited
in the Trust. If the Trust is liquidated because of the redemption of unsold
Units by the Sponsor and/or the Managing Underwriter, 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" in
Part One.
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trust. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. The Sponsor shall direct the liquidation of 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 of the Trust.
Unitholders will receive a cash distribution from the sale of the remaining
Securities within a reasonable time following the Mandatory Termination Date.
The Trustee will deduct from the funds of the 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 in the Trust 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 of the Trust his
pro rata share of the balance of the Income and Capital Accounts of the Trust.
Within 60 days after 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
the Trust which the Trustee may be required to pay under any present or future
law of the United States of America or of any other taxing authority having
jurisdiction. 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.
Managing Underwriter and Supervisor. International Assets Advisory
Corporation ("IAAC"), the Managing Underwriter for the Trust, is a full-service
securities brokerage firm specializing in global investing. IAAC was formed as a
Florida corporation in 1981 and registered as a broker/dealer in 1982. The firm
has focused on the sale of global debt and equity securities to its clients.
IAAC has developed an experienced team specializing in the selection, research,
trading, currency exchange and execution of individual equity and fixed-income
products on a global basis. Members of this team are also affiliated with Global
Assets Advisors, Inc. and have many years of experience in the global
marketplace. Global Assets Advisors, Inc., is the Supervisor and provides
research and portfolio supervisory services for the Trust. Global Assets
Advisors is a wholly-owned subsidiary of International Assets Holding
Corporation and a related corporation of IAAC. The principal offices of IAAC and
Global Assets Advisors are located at 250 Park Avenue South, Suite 200, Winter
Park, Florida 32789. The telephone number is (800) 432-0000.
Sponsor. Van Kampen Funds Inc., a Delaware corporation, is the Sponsor
of the Trust. The Sponsor is an indirect subsidiary of Morgan Stanley Dean
Witter & Co. Van Kampen Funds 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. As of November 30, 1998, the total
stockholders' equity of Van Kampen Funds Inc. was $135,236,000 (audited).
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 Trust 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 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 portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder of the Trust. 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 the 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. Winston & Strawn has acted as counsel for the Trustee.
Independent Certified Public Accountants. The statement of condition and the
related securities portfolio 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.
TABLE OF CONTENTS
- -----------------------------------------------------
Title Page
----- ----
The Trust................................... A-2
Objectives and Securities Selection......... A-2
Trust Portfolio............................. A-4
Risk Factors................................ A-4
Taxation.................................... A-8
Trust Operating Expenses.................... A-11
Public Offering............................. A-12
Rights of Unitholders....................... A-15
Trust Administration........................ A-17
Other Matters............................... A-21
PROSPECTUS
PART TWO
-----------------------------
INTERNATIONAL ASSETS
ADVISORY CORP.
GLOBAL PASSPORT SERIES
Infrastructure and
Utilities Growth Trust,
Series 1
Van Kampen American Capital
Equity Opportunity Trust,
Series 84
INTERNATIONAL ASSETS
ADVISORY CORP.
250 Park Avenue South
Suite 200
Winter Park, Florida 32789
Please retain this Prospectus for future reference.
Contents of Post-Effective Amendment
to Registration Statement
This Post-Effective Amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
Signatures
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Van Kampen American Capital Equity Opportunity Trust, Series 84, certifies that
it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment to its Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Chicago and State of Illinois
on the 22nd day of February, 1999.
Van Kampen American Capital Equity Opportunity Trust, Series 84
(Registrant)
By Van Kampen Funds Inc.
(Depositor)
By Gina Costello
Assistant Secretary
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below on February 22, 1999
by the following persons who constitute a majority of the Board of Directors of
Van Kampen Funds Inc.:
SIGNATURE TITLE
Richard F. Powers III Chairman and Chief Executive )
Officer )
John H. Zimmerman III President and Chief Operating )
Officer )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
A. Thomas Smith III Executive Vice President, )
Gereral Counsel and Secretary )
Michael H. Santo Executive Vice President )
Gina M. Costello______________
(Attorney in Fact)*
- --------------------
* An executed copy of each of the related powers of attorney is filed herewith
or was filed with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Van Kampen Focus Portfolios, Series 136
(File No. 333-70897) and the same are hereby incorporated herein by this
reference.
Consent of Independent Certified Public Accountants
We have issued our report dated December 24, 1998 accompanying the
financial statements of Van Kampen American Capital Equity Opportunity Trust,
Series 84 as of October 31, 1998 and for the period then ended, contained in
this Post-Effective Amendment No. 1 to Form S-6.
We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".
Grant Thornton LLP
Chicago, Illinois
February 22, 1999
