File No. 333-44581
CIK #1025233
Securities and Exchange Commission
Washington, D.C. 20549-1004
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.
A. Exact Name of Trust: Van Kampen American Capital Equity
Opportunity Trust, Series 87
B. Name of Depositor: Van Kampen American Capital
Distributors, Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler Van Kampen American Capital Distributors, Inc.
Attention: Mark J. Kneedy Attention: Don G. Powell, Chairman
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title of securities being registered: Units of proportionate
interest
F. Approximate date of proposed sale to the public:
As Soon As Practicable After the Effective Date of the
Registration Statement
/ X / Check box if it is proposed that this filing will become effective
at 2:00 p.m. on January 27, 1998 pursuant to Rule 487.
Van Kampen American Capital Equity Opportunity Trust
Series 87
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) *
underwriter
5. Organization of trust ) The Trusts
6. Execution and termination of ) The Trusts
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and
Securities of the Trust
10. General information regarding ) The Trusts
trust's securities and ) Federal Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Trust Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trusts
) Trust Portfolios
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Portfolios
)
) Trust Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information regarding )
periodic payment plan ) *
certificates )
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
)
) Public Offering
) Rights of Unitholders
(d) Certain other fees, expenses or ) Trust Operating
Expenses
charges payable by holders ) Rights of Unitholders
(e) Certain profits to be received ) Public Offering
by depositor, principal ) *
underwriter, trustee or any ) Trust Portfolios
affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Rights of Unitholders
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trusts
underlying securities ) Rights of Unitholders
) Trust Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Trust Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions ) *
(c) Reserves or special Trusts ) Trust Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Trust Administration
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolios
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. Organization, Personnel and Affiliated
Persons of Depositor
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities ) Public Offering
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Operating Expenses
) Public Offering
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) *
to certain persons )
46. (a) Redemption valuation ) Rights of Unitholders
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Trust Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's ) Cover Page
securities ) Trust Operating Expenses
52. (a) Provisions of trust agreement )
with respect to replacement ) Trust Administration
or elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying ) Trust Administration
securities )
(d) Trustamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Federal Taxation
VII. Financial and Statistical Information
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements (Instructions ) Report of Independent
Certified 1(c) to Form S-6) ) Public Accountants
) Statements of Condition
______________________________________________
* Inapplicable, omitted, answer negative or not required
January 27, 1998
VAN KAMPEN AMERICAN CAPITAL
Small-Cap Growth Trust, Series 1
Mid-Cap Growth Trust, Series 1
The Fund. Van Kampen American Capital Equity Opportunity Trust, Series 87 (the
"Fund" ) is comprised of the underlying separate unit investment trusts
described above (the "Trusts" ). The Trusts offer investors the
opportunity to purchase Units representing proportionate interests in separate
fixed portfolios of actively traded equity securities issued by small or
mid-size companies ("Equity Securities" or "Securities" ). See
"Trust Portfolios" . Unless terminated earlier, the Trusts will
terminate on the Mandatory Termination Date and any Securities then held will,
within a reasonable time thereafter, be liquidated or distributed by the
Trustee. Any Securities liquidated at termination will be sold at the then
current market value for such Securities; therefore, the amount distributable
in cash to a Unitholder upon termination may be more or less than the amount
such Unitholder paid for his Units. Upon liquidation, Unitholders may choose
to reinvest their proceeds into a subsequent Trust series, if available, at a
reduced sales charge, to receive a cash distribution or to receive a pro rata
distribution of the Securities (if they own the requisite number of Units).
Attention Foreign Investors. If you are not a United States citizen or
resident, distributions will generally be subject to U.S. federal withholding
taxes; however, under certain circumstances treaties between the United States
and other countries may reduce or eliminate such withholding tax. See "
Federal Taxation." Such investors should consult their tax advisers
regarding the imposition of U.S. withholding on distributions.
Objective of the Trusts. The objective of the Trusts is to provide the
potential for capital appreciation by investing in a diversified portfolio of
equity securities issued by small or mid-size companies. See "Objectives
and Securities Selection" . There is, of course, no guarantee that the
objective of a Trust will be achieved.
Public Offering Price. The Public Offering Price of the Units during the
initial offering period and for secondary market transactions after the
initial offering period includes the aggregate underlying value of the
Securities, an initial sales charge, and cash, if any, in the Income and
Capital Accounts. The initial sales charge is computed as described under "
Public Offering--General" . Unitholders will also be subject to a deferred
sales charge as described under "Public Offering--General" . During the
initial offering period, the sales charge is reduced on a graduated scale for
sales involving at least 10,000 Units of a Trust. If Units were available for
purchase at the close of business on the day before the Initial Date of
Deposit, the Public Offering Price per Unit would have been that amount set
forth under "Summary of Essential Financial Information" . Except as
provided in "Public Offering--Unit Distribution" , the minimum purchase
is 100 Units. See "Public Offering" .
Additional Deposits. The Sponsor may, from time to time after the Initial Date
of Deposit, deposit additional Securities in the Trusts as provided under "
The Trusts" .
Units are not insured by the FDIC, are not deposits or other obligations of,
or guaranteed by, any depository institution or any government agency and are
subject to investment risk, including possible loss of the principal amount
invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Dividend and Capital Distributions. Distributions of dividends and capital, if
any, received by a Trust will be paid in cash on the Distribution Dates to
Unitholders of record on the record dates as set forth in the "Summary of
Essential Financial Information" . Gross dividends received by a Trust will
be distributed to Unitholders. Expenses of a Trust will be paid with proceeds
from the sale of Securities. For the consequences of such sales, see "
Federal Taxation" . Additionally, upon surrender of Units for redemption or
termination of a Trust, the Trustee will distribute to each Unitholder his pro
rata share of the Trust's assets, less expenses, in the manner set forth under
"Rights of Unitholders--Distributions of Income and Capital" .
Secondary Market For Units. Although not obligated to do so, the Sponsor
currently intends to maintain a market for Units and offer to repurchase such
Units at prices which are based on the aggregate underlying value of Equity
Securities (generally determined by the closing sale or bid prices of the
Securities) plus or minus cash, if any, in the Capital and Income Accounts. If
a secondary market is not maintained, a Unitholder may redeem Units at prices
based upon the aggregate underlying value of the Equity Securities plus or
minus a pro rata share of cash, if any, in the Capital and Income Accounts.
See "Rights of Unitholders--Redemption of Units" . Units sold or
tendered for redemption prior to such time as the entire deferred sales charge
on such Units has been collected will be assessed the amount of the remaining
deferred sales charge at the time of sale or redemption. A Unitholder
tendering 1,000 or more Units for redemption may request a distribution of
shares of Securities (reduced by customary transfer and registration charges)
in lieu of payment in cash. See "Rights of Unitholders--Redemption of
Units" .
Termination. The Trusts will terminate approximately two years following the
Initial Date of Deposit. At least 30 days prior to the Mandatory Termination
Date the Trustee will provide written notice thereof to all Unitholders and
will include with such notice a form to enable Unitholders to elect a
distribution of shares of the Securities (reduced by customary transfer and
registration charges) if such Unitholder owns at least 1,000 Units, rather
than to receive payment in cash for such Unitholder's pro rata share of the
amounts realized upon the disposition of such Securities. Unitholders will
receive cash in lieu of any fractional shares. To be effective, the election
form, and any other documentation required by the Trustee, must be returned to
the Trustee at least five business days prior to the Mandatory Termination
Date. Unitholders may elect to become Rollover Unitholders as described in
"Special Redemption and Rollover in New Trust" below. Rollover
Unitholders will not receive the final liquidation distribution but will
receive units of a new Aggressive Growth Series, if one is being offered.
Unitholders not electing the Rollover Option or a distribution of shares of
Securities will receive a cash distribution from the sale of the remaining
Securities within a reasonable time after a Trust is terminated. See "
Trust Administration--Amendment or Termination" .
Reinvestment Option. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase Units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales
charge to the extent stated in the related prospectus (which may be deferred
in certain cases).
In the event that a distribution is made to Unitholders prior to a Trust's
termination, Unitholders will have such distributions reinvested into
additional Units of the Trust subject only to the remaining deferred sales
charge payments as set forth herein, if Units are available at the time of
reinvestment, or distributed in cash. See "Rights of
Unitholders--Reinvestment Option" .
Special Redemption and Rollover in New Trust. The Sponsor currently
anticipates that a new series of the Fund will be created quarterly.
Unitholders will have the option, subject to any necessary regulatory
approval, of specifying by either Rollover Notification Date stated in "
Summary of Essential Financial Information" to have all of their Units
redeemed and the distributed Securities sold by the Trustee, in its capacity
as Distribution Agent, on the related Special Redemption Date. (Unitholders so
electing are referred to herein as "Rollover Unitholders" .) The
Distribution Agent will appoint the Sponsor as its agent to determine the
manner, timing and execution of sales of underlying Securities. The proceeds
of the redemption will then be invested in units of a new series of the Trusts
(the "New Trust" ), if one is offered, at a reduced sales charge. The
Sponsor may, however, stop offering units of the New Trust at any time in its
sole discretion without regard to whether all the proceeds to be invested have
been invested. Cash which has not been invested on behalf of the Rollover
Unitholders in the New Trust will be distributed shortly after the related
Special Redemption Date. However, the Sponsor anticipates that sufficient
Units will be available, although moneys in the current Trusts may not be
fully invested on the next business day. The New Trust will contain a
portfolio of common stocks of growth companies with an investment objective of
obtaining capital appreciation. Rollover Unitholders will receive the amount
of dividends in the Income Account which will be included in the reinvestment
in units of the New Trust.
Risk Factors. An investment in Units should be made with an understanding of
the risks associated therewith, including the possible deterioration of the
financial condition of the issuers, the general condition of the stock market
and stock price volatility. For certain risk considerations related to the
Trusts, see "Risk Factors" .
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 87
Summary of Essential Financial Information
At the close of business on the day before the Initial Date of Deposit: January 26, 1998
Sponsor: Van Kampen American Capital Distributors, Inc.
Supervisor: Van Kampen American Capital Investment Advisory Corp.
(An affiliate of the Sponsor)
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
Small-Cap Mid-Cap
Growth Growth
Trust Trust
------------ -----------
<S> <C> <C>
Number of Units <F1>........................................................... 14,923 14,877
Fractional Undivided Interest in the Trust per Unit <F1>....................... 1/14,923 1/14,877
Public Offering Price:
Aggregate Value of Securities in Portfolio <F2>...............................$ 147,734$ 147,280
Aggregate Value of Securities per Unit........................................$ 9.90$ 9.90
Sales Charge <F3>.............................................................$ .325$ .325
Less Deferred Sales Charge per Unit...........................................$ .225$ .225
Public Offering Price per Unit <F3><F4>.......................................$ 10.00$ 10.00
Redemption Price per Unit <F5>.................................................$ 9.61$ 9.66
Initial Secondary Market Repurchase Price per Unit <F5>........................$ 9.67$ 9.67
Excess of Public Offering Price per Unit over Redemption Price per Unit <F5>...$ .33$ .33
Estimated Annual Organizational Expenses per Unit <F6>.........................$ .00956$ .00956
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee .................Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee....................Maximum of $.0025 per Unit
Rollover Notification Dates .........................February 23, 1999 and December 25, 1999
Special Redemption Dates.............................March 23, 1999 and January 25, 2000
Mandatory Termination Date ..........................January 25, 2000
A Trust may be terminated if the net asset value of the Trust is less than
$500,000 unless the net asset value of the Trust's deposits have exceeded
$15,000,000, then the Trust Agreement may be terminated if the net asset
Minimum Termination Value............................value of the Trust is less than $3,000,000.
Trustee's Annual Fee ................................$.008 per Unit
Income and Capital Account Record Dates <F7>.........June 10 and December 10
Income and Capital Account Distribution Dates <F7>...June 25 and December 25
Evaluation Time......................................Close of New York Stock Exchange
- ----------
<FN>
<F1>As of the close of business on any day on which the Sponsor is the sole
Unitholder of a Trust, the number of Units may be adjusted so that the Public
Offering Price per Unit will equal approximately $10. Therefore, to the extent
of any such adjustment the fractional undivided interest per Unit will
increase or decrease from the amount indicated above.
<F2>Each Security listed on a national securities exchange is valued at the
closing sale price or if the Security is not so listed, at the asked price
thereof.
<F3>The Sales Charge consists of an initial sales charge and a deferred sales
charge. The initial sales charge is applicable to all Units and represents an
amount equal to the difference between the total sales charge (3.25% of the
Public Offering Price) and the amount of the deferred sales charge ($0.225 per
Unit). Unitholders will also be subject to a deferred sales charge equal to
$0.225 per Unit. Subsequent to the Initial Date of Deposit, the amount of the
initial sales charge will vary with changes in the aggregate value of the
Securities. Units purchased subsequent to the initial deferred sales charge
payment will be subject only to that portion of the deferred sales charge
payments not yet collected. These deferred sales charge payments will be paid
from funds in the Capital Account, if sufficient, or from the periodic sale of
Securities. See the "Fee Table" below and "Public
Offering--General" .
<F4>On the Initial Date of Deposit there will be no cash in the Income or Capital
Accounts. Anyone ordering Units after such date will have included in the
Public Offering Price a pro rata share of any cash in such Accounts.
<F5>The Redemption Price per Unit and the Initial Secondary Market Repurchase
Price per Unit are reduced by the unpaid portion of the deferred sales charge.
<F6>Each Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration statement,
the trust indenture and other closing documents, registering Units with the
Securities and Exchange Commission and states, the initial audit of the Trust
portfolio and the initial fees and expenses of the Trustee but not including
the expenses incurred in the preparation and printing of brochures and other
advertising materials and any other selling expenses) as is common for mutual
funds. Total organizational expenses will be amortized over two years and paid
from funds in the Capital Account, if sufficient, or from the sale of
Securities. See "Trust Operating Expenses" and "Statements of
Condition" .
<F7>No distribution will be made unless the amount available for distribution in
the Income and Capital Accounts equals at least $0.01 per Unit.
</TABLE>
FEE TABLE
This Fee Table is intended to assist investors in understanding the costs and
expenses that an investor will bear directly or indirectly. See "Public
Offering--General" and "Trust Operating Expenses" . Although each Trust has a
fixed term, and is a unit investment trust rather than a mutual fund, this
information is presented to permit a comparison of fees. The example below
assumes that the principal amount of and distributions on an investment are
rolled over into a new series of the Trusts at Trust termination subject only
to the anticipated reduced sales charge applicable to Rollover Unitholders.
See "Right of Unitholders--Special Redemption and Rollover in New Trust."
Investors should note that while this example is based on the public offering
price and the estimated fees for the current Trusts, the actual public
offering price and fees for any new trusts created in the future periods
indicated could vary from those of the current Trusts.
<TABLE>
<CAPTION>
Amount Per
Unitholder Transaction Expenses (as a percentage of offering price) 100 Units
---------------
<S> <C> <C>
Initial Sales Charge Imposed on Purchase<F1>..................................... 1.00% $ 10.00
Deferred Sales Charges<F2>....................................................... 2.25% 22.50
Total Sales Charge............................................................... 3.25% $ 32.50
========= ===============
Maximum Sales Charge Imposed on Reinvested Dividends<F3>......................... 2.25% $ 22.50
========= ===============
Estimated Annual Trust Operating Expenses (as a percentage of aggregate value)
Trustee's Fee ................................................................... 0.081% $ 0.80
Portfolio Supervision and Evaluation Fees ....................................... 0.051% 0.50
Organizational Costs............................................................. 0.097% 0.96
Other Operating Expenses ........................................................ 0.042% 0.42
--------- ---------------
Total ........................................................................... 0.271% 2.68
========= ===============
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for Period of:
---------------------------------------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment, assuming a 5% annual
return and redemption at the end of each time period $ 35 $ 65 N/A N/A
The example assumes reinvestment of all dividends and distributions at the end
of each year and utilizes a 5% annual rate of return as mandated by Securities
and Exchange Commission regulations applicable to mutual funds. For purposes
of the example, the deferred sales charge imposed on reinvestment of dividends
is not reflected until the year following payment of the dividend; the
cumulative expenses would be higher if sales charges on reinvested dividends
were reflected in the year of reinvestment. The example should not be
considered representations of past or future expenses or annual rate of
return; the actual expenses and annual rate of return may be more or less than
those assumed for purposes of the example.
- ----------
<FN>
<F1>The Initial Sales Charge is actually the difference between the Total Sales
Charge (3.25% of the Public Offering Price) and the Deferred Sales Charges
($0.225 per Unit) and would exceed 1.00% if the Public Offering Price exceeds
$10 per Unit.
<F2>The actual deferred sales charge is $0.225 per Unit, irrespective of purchase
or redemption price, deducted over eight months. If a Unitholder sells or
redeems Units before all of the deferred sales charge payments have been
deducted, the balance of the remaining payments will be deducted from the
sales or redemption proceeds. If Unit price exceeds $10 per Unit, the deferred
portion of the sales charge will be less than 2.25%; if Unit price is less
than $10 per Unit, the deferred portion of the sales charge will exceed 2.25%.
Units purchased subsequent to the initial deferred sales charge payment will
be subject to only that portion of the deferred sales charge payments not yet
collected.
<F3>Reinvested dividends will be subject only to the deferred sales charge
remaining at the time of reinvestment. See "Rights of
Unitholders--Reinvestment Option" .
</TABLE>
THE TRUSTS
- --------------------------------------------------------------------------
Van Kampen American Capital Equity Opportunity Trust, Series 87 is comprised
of two underlying separate unit investment trusts designated as Small-Cap
Growth Trust, Series 1 and Mid-Cap Growth Trust, Series 1. The Fund was
created under the laws of the State of New York pursuant to a Trust Indenture
and Trust Agreement (the "Trust Agreement" ), dated the date of this
Prospectus (the "Initial Date of Deposit" ), among Van Kampen American
Capital Distributors, Inc., as Sponsor, Van Kampen American Capital Investment
Advisory Corp., as Supervisor, The Bank of New York, as Trustee, and American
Portfolio Evaluation Services, a division of Van Kampen American Capital
Investment Advisory Corp., as Evaluator.
The Trusts offer investors the opportunity to purchase Units representing
proportionate interests in separate portfolios of actively traded equity
securities issued by small or mid-size companies. Diversification of assets in
a Trust will not eliminate the risk of loss always inherent in the ownership
of securities.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Portfolio" herein, including delivery
statements relating to contracts for the purchase of certain such Securities
and an irrevocable letter of credit issued by a financial institution in the
amount required for such purchases. Thereafter, the Trustee, in exchange for
such Securities (and contracts) so deposited, delivered to the Sponsor
documentation evidencing the ownership of that number of Units indicated in
"Summary of Essential Financial Information" . Unless terminated
earlier, each Trust will terminate on the Mandatory Termination Date set forth
under "Summary of Essential Financial Information" and any Securities
then held will, within a reasonable time thereafter, be liquidated or
distributed by the Trustee. Any Securities liquidated at termination will be
sold at the then current market value for such Securities; therefore, the
amount distributable in cash to a Unitholder upon termination may be more or
less than the amount such Unitholder paid for his Units. Upon either Rollover
Notification Date, Unitholders may choose to reinvest their proceeds into a
subsequent Trust series, if available, at a reduced sales charge, to receive a
pro rata distribution of the Securities then included in a Trust (if they own
the requisite minimum number of Units) or to receive a cash distribution.
Additional Units of a 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 a 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 a
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. Existing and
new investors may experience a dilution of their investments and a reduction
in their anticipated income as a result of an additional deposit because of
fluctuations in the prices of the Securities between the time of the deposit
and the purchase of the Securities and because the Trusts will pay the
associated brokerage fees.
Each Unit initially offered represents an undivided interest in the related
Trust. To the extent that any Units are redeemed by the Trustee or additional
Units are issued as a result of additional Securities being deposited by the
Sponsor, the fractional undivided interest in a Trust represented by each
unredeemed Unit will increase or decrease accordingly, although the actual
interest in 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 until the termination of the
Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
- --------------------------------------------------------------------------
The objective of each Trust is to provide the potential for capital
appreciation. There is, of course, no assurance that a Trust (which includes
expenses and sales charges) will achieve its objective. Asset allocation can
be an important part of investing. Success of an investment portfolio is
significantly impacted by allocation between stocks, bonds and cash. Proper
allocation of stock investments among large-cap, mid-cap and small-cap
companies can be an important part of overall portfolio success.
Small-Cap Growth Trust. The Small-Cap Growth Trust includes common stocks
issued by small companies with market capitalizations primarily under $1
billion. The Securities in the portfolio have an average market capitalization
of under $1 billion. While large company stocks have provided solid historical
returns, an investment in smaller company stocks may provide additional
diversification to an investment portfolio. Small company stocks may be
undervalued compared to large company stocks because they have not
participated as fully in gains in recent years. Small company returns have
historically shown higher total returns than large company returns over the
long term. For example, $1 invested in the stocks included in the Russell 2000
Index in 1926 would have grown to $4,496 by the end of 1997, while $1 invested
in the Russell 3000 Index stocks would have grown to $1,371 over that time. Of
course, past performance is not indicative of future results and smaller
company stocks tend to have higher price volatility than larger company stocks.
Mid-Cap Growth Trust. The Mid-Cap Growth Trust includes common stocks issued
by mid-size companies with market capitalizations primarily between $1 billion
and $5 billion. The Securities in the portfolio have an average market
capitalization within this range. Mid-size company stocks have historically
outperformed large company stocks over the long term and may provide an
opportunity for investors to balance their portfolio with the growth potential
of mid-cap companies.
General. Investors will be subject to taxation on the dividend income, if any,
received by a 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 a 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. See "Risk Factors" .
Investors should be aware that the Trusts are not "managed" funds and
as a result the adverse financial condition of a company will not result in
its elimination from a portfolio except under extraordinary circumstances (see
"Trust Administration--Portfolio Administration" ). In addition,
Securities will not be sold by the Trusts to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Investors should
note in particular that the Securities were selected for inclusion in each
Trust as of the Initial Date of Deposit. Subsequent to the Initial Date of
Deposit, the Securities may no longer meet the criteria necessary for
inclusion on the Initial Date of Deposit. Should a Security fail to meet such
criteria following the Initial Date of Deposit, such Security will not as a
result thereof be removed from a portfolio. In addition, since the Sponsor may
deposit additional Equity Securities which were originally selected through
this process, the Sponsor may continue to sell Units even though the Equity
Securities would no longer be chosen for deposit into the Trusts if the
selection process were to be made again at a later time. Because certain of
the Equity Securities from time to time may be sold under certain
circumstances described herein, and because the proceeds from such events will
in most cases be distributed to Unitholders and will not be reinvested, no
assurance can be given that a Trust will retain for any length of time its
present size and composition. Although the portfolios are not managed, the
Sponsor may instruct the Trustee to sell Equity Securities under certain
limited circumstances. See "Trust Administration--Portfolio
Administration."
TRUST PORTFOLIOS
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The Small-Cap Growth Trust consists of a diversified portfolio of common
stocks issued by smaller companies. The Mid-Cap Growth Trust consists of a
diversified portfolio of common stocks issued by mid-size companies. All of
the Securities are listed on a national securities exchange, the NASDAQ
National Market System or are traded in the over-the-counter market. A general
description of the issuers currently anticipated to be used in a each Trust is
listed below. The actual portfolio is subject to change at the Initial Date of
Deposit.
Small-Cap Growth Trust.
American Disposal Services, Inc. American Disposal Services, Inc. provides
pollution control equipment and services. The company provides solid waste
collection, transfer and disposal services for residential, commercial and
industrial customers primarily in the Midwest.
AmeriCredit Corporation. AmeriCredit Corporation provides consumer auto loans
and offers specialty financing products. Through "AmeriCredit Financial
Services" , the company offers indirect loans to customers who purchase
their cars at independent dealers. The company targets consumers who are
typically unable to obtain financing from traditional sources. The company
operates 66 lending offices in 27 states.
Applied Graphics Technologies, Inc. Applied Graphics Technologies, Inc.
provides digital prepress services to magazine publishers, advertising
agencies, entertainment companies, an automobile manufacturer and catalog
retailers. The company provides its services on an outsourcing basis.
Aspect Development, Inc. Aspect Development, Inc. develops, markets and
supports enterprise client/server software and reference data products that
enable manufacturers to improve product development and business processes
through component and supplier management. The company's products enable
rapid search, comparison and selection of optimal components and suppliers and
promote the reuse of design.
Caribiner International, Inc. Caribiner International, Inc. is an
international producer of meetings, events and training programs. The company
provides related business communications services that enable businesses to
inform, sell to and train their sales forces, dealers, franchisees, partners,
stockholders and employees. Caribiner has offices throughout the US, UK,
Australia, Dubai, Hong Kong and New Zealand.
Cinar Films Inc. Cinar Films Inc. is an integrated entertainment company
involved in the development, production, post production and worldwide
distribution of non-violent, quality programming and educational products for
children and families. The company's series, mini-series and family films are
seen in the United States, Canada and 100 other countries worldwide.
Computer Learning Centers, Inc. Computer Learning Centers, Inc. provides
information and computer-related education and training. The company designs
programs and courses to meet current information technology education needs,
offering instructions in client/server, databases, networking and
object-oriented programming. Computer Learning Centers operate 14 centers in
the United States.
Consolidated Graphics, Inc. Consolidated Graphics, Inc. provides general
commercial printing services in the United States. The company prints annual
reports, product and corporate brochures, direct mail, catalogs and
promotional materials. Consolidated provides its services to Houston, Dallas,
Denver, Phoenix, Portland, San Antonio, Tulsa, San Diego and Seattle.
Cooper Companies, Inc. Cooper Companies, Inc., through its primary
subsidiaries, develops, manufactures and markets health care products. The
company's products include contact lenses and diagnostic and surgical
instruments and accessories. Cooper also provides healthcare services through
the ownership and operation of psychiatric facilities.
DAOU Systems, Inc. DAOU Systems, Inc. designs, installs, supports and manages
healthcare information networks for hospitals, integrated healthcare delivery
systems, and provider organizations. The company focuses on medium-sized
healthcare organizations.
Dril-Quip, Inc. Dril-Quip, Inc. designs and manufactures offshore drilling and
production equipment. The company's equipment is used by oil and gas
companies in offshore areas worldwide. Dril-Quip also provides installation
and reconditioning services and rents out tools used to install and retrieve
its products.
Engineering Animation, Inc. Engineering Animation, Inc. develops, produces and
sells three dimensional animation products that address visualization,
animation and graphic needs. The company sells its products to the automotive,
aerospace, heavy equipment and manufacturing industries.
ESC Medical Systems Limited. ESC Medical Systems Limited develops,
manufactures and markets medical devices utilizing proprietary intense pulsed
light source technology for non-invasive treatment of varicose veins and other
benign vascular lesions, as well as other clinical applications.
Fidelity National Financial, Inc. Fidelity National Financial, Inc. is a
national underwriter that issues title insurance policies and provides other
title-related services. The company, through its underwriting subsidiaries,
operates in 49 states, the District of Columbia, Puerto Rico, the Bahamas and
the Virgin Islands.
Friede Goldman International Inc. Friede Goldman International Inc. is an oil
field services provider. The company's customers consist primarily of
offshore contractors that drill for oil and gas companies throughout the
world. Friede offers a range of design, engineering, construction, conversion,
retrofit and repair services for offshore drilling rigs.
Information Management Resources, Inc. Information Management Resources, Inc.
provides applications software outsourcing solutions for the information
technology departments of large businesses with intensive information
processing needs. The company operates in the United States, the United
Kingdom and Western Europe.
Mail-Well, Inc. Mail-Well, Inc. designs, prints and manufactures customer
specific envelopes. The company also provides high-impact color printing which
specializes in advertising literature, catalogs and annual reports. Mail-Well
operates 50 envelope and commercial printing facilities throughout
metropolitan areas in the United States and Canada.
Mastech Corporation. Mastech Corporation provides information technology
services to organizations worldwide. The company provides its clients with a
single source for a broad range of applications solutions and services,
including client/server design and development, conversion/migration services,
Year 2000 services, Enterprise Resource Planning package implementation
services and maintenance outsourcing.
Medicis Pharmaceutical Corporation. Medicis Pharmaceutical Corporation markets
numerous prescription and over-the-counter products to treat various
dermatological conditions. The company currently markets "DYNACIN" ,
"TRIAZ" , "LIDEX" , "SYNALAR" , "AFIRM" , "
BETA-LIFT" , "THERMYCIN Z" , "BENZASHAVE" , "
THERAPLEX" and "ESOTERICA."
Party City Corporation. Party City Corporation provides a large variety of
party supplies including plates, cups, costumes, invitations, hats, horns,
banners, candy, cards, gift wrap and more. The network includes 44
company-owned stores and 159 franchise locations in the United States, Puerto
Rico, Canada and Spain.
Romac International, Inc. Romac International, Inc. provides staffing services
to companies and individuals. The company provides its services in the areas
of accounting/finance, information systems, health care, pharmaceutical
research, manufacturing services, sales and marketing areas, human resources
and insurance. Romac serves companies in 15 metropolitan markets and two
markets through franchisees and licensees.
Sapient Corporation. Sapient Corporation designs, develops, integrates and
implements flexible information technology applications and solutions for
large organizations. The applications help clients to improve their processes
and performance. The company targets clients in information-intensive
businesses, including financial services, telecommunications, utilities,
manufacturing and retail industries.
Sirrom Capital Corporation. Sirrom Capital Corporation is a specialty finance
company that makes loans to small private businesses located in the United
States and Canada. The company also invests in micro-cap public companies
through its wholly owned subsidiary, Tandem Capital, Inc. Sirrom provides
merger and acquisition advisory services to small and medium-sized companies
through its subsidiary, Harris Williams & Co.
Stage Stores, Inc. Stage Stores, Inc. owns and operates men's, women's and
children's apparel stores primarily in the central region of the United
States. The company's stores operate under the "Stage," "
Bealls" and "Pilaus Royal" names.
Suiza Foods Corporation. Suiza Foods Corporation is a holding company and
consolidator of distribution oriented food businesses. The company's
principal holdings are in the dairy processing, refrigerated, shelf-stable and
frozen food products, packaged ice, and plastic container industries. Suiza's
subsidiaries operate in several states and Puerto Rico.
Sunrise Assisted Living, Inc. Sunrise Assisted Living, Inc. is a provider of
assisted living to the elderly. The company's facilities provide housing and
24-hour a day personal support services, such as bathing, eating and dressing.
Sunrise currently operates 37 owned and managed facilities in 11 states.
Veritas DGC Inc. Veritas DGC Inc. provides land, transition zone and
marine-based seismic data acquisition; seismic data processing; and
multi-client data sales. The company provides its services to the petroleum
industry in selected markets worldwide.
Visio Corporation. Visio Corporation supplies business drawing and diagramming
software. The company's software allows business and technical users to
create drawings by using a simple drag and drop approach. Visio currently
markets the "Visio" product line in nine languages and in more than 40
countries.
Whole Foods Market, Inc. Whole Foods Market, Inc. owns and operates a chain of
natural food supermarkets. The company offers a variety of natural products
including organically-grown and commercial produce and grocery products,
environmentally safe household items, meat, specialty gourmet foods and
prepared foods. Whole Foods operates approximately 70 stores in 17 states plus
the District of Columbia.
Mid-Cap Growth Trust
AMBAC Financial Group, Inc. AMBAC Financial Group, Inc. is a holding company
that provides financial guarantee insurance and financial services. The
company, through its subsidiary Ambac Assurance Corporation, insures municipal
and structured finance obligations. Ambac Financial serves clients in both the
public and private sectors through its affiliates in the United States and
abroad.
AccuStaff Incorporated. AccuStaff Incorporated is an international provider of
business services, including consulting, outsourcing, training and strategic
staffing services to businesses. The company operates over 100 offices in the
United States, Canada, Continental Europe, the United Kingdom, and Latin
America.
BJ Services Company. BJ Services Company provides pressure pumping and other
oil field services for the petroleum industry worldwide. The company's
pressure pumping services consist of well stimulation, cementing, sand
control, and coiled tubing services used in the completion of new oil and
natural gas wells, and in remedial work on existing onshore and offshore wells.
Brinker International, Inc. Brinker International, Inc. operates, develops and
franchises "Chili's Grill & Bar" , "Romano's Macaroni Grill" ,
"On The Border Mexican Cafe" , "Cozymel's Coastal Mexican
Grill" , "Maggiano's Little Italy" and the "Corner Bakery"
restaurant concepts. The company is also involved in the operation and
development of the "Eastzi's Market and Bakery" concept.
Brylane, Inc. Brylane, Inc., retails apparel through specialty catalogs. The
company sells special size apparel under the names "Lane Bryant" , "
Roaman's" , "Jessica London" and "KingSize" . Brylane also
sells women's regular-size apparel under the names "Lerner" , "
Chadwick's of Boston" , "Sue Brett" and "Bridgewater" .
Cadence Design Systems, Inc. Cadence Design Systems, Inc. provides
comprehensive services and technology for the product development requirements
of the world's electronics companies. The company supplies software tools and
professional services used to accelerate and manage the design of
semiconductors, computer systems, networking and telecommunications equipment,
consumer electronics and other electronic products.
CDW Computer Centers, Inc. CDW Computer Centers, Inc. sells microcomputer
hardware and peripherals, accessories and networking products and software.
The company markets the MS-DOS/Microsoft Windows-based microcomputer products
through telemarketing account executives, who service customers through an
"800" telephone number. Customers include businesses, institutions and
home office users.
CIENA Corporation. CIENA Corporation designs, manufactures and sells dense
wavelength division multiplexing systems for long distance fiberoptic
telecommunications networks. The company's product, the "Multiwave 1600",
alleviates capacity constraints in high traffic fiberoptic routes without
requiring installation of new fiber.
CMAC Investment Corporation. CMAC Investment Corporation is a holding company
for Commonwealth Mortgage Assurance Company, which provides private mortgage
insurance coverage. The coverage is provided to residential mortgage lenders,
including mortgage bankers, mortgage brokers, commercial banks and savings
institutions throughout the United States.
Cognizant Corporation. Cognizant Corporation, through its operating units,
offers global information solutions to the pharmaceutical and healthcare
industries, and researches audience measurement for electronic media. The
Company is also a shareholder of Gartner Group, the provider of research and
advisory services to the information technology industry.
Comverse Technology, Inc. Comverse Technology, Inc. designs, develops,
manufactures and markets computer and telecommunications systems, and software
for communications and information processing applications. The company's
products include "TRILOGUE" multimedia messaging services, "
AUDIODISK" multimedia digital monitoring systems and "ULTRA"
multimedia recording systems.
Dime Bancorp, Inc. Dime Bancorp, Inc. is the parent company of the Dime
Savings Bank of New York, FSB and BFS Bankorp, Inc. The Dime Savings Bank
operates 90 New York metropolitan branches. The bank also provides mortgage
banking and consumer financial services in selected United States markets. BFS
Bankorp is the parent company of Bankers Federal Savings FSB with five New
York City branches.
El Paso Natural Gas Company. El Paso Natural Gas Company, doing business as El
Paso Energy Corporation, gathers, processes, transmits and markets natural
gas. The company's energy business also includes international development,
field services and energy marketing.
ESC Medical Systems Limited. ESC Medical Systems Limited develops,
manufactures and markets medical devices utilizing proprietary intense pulsed
light source technology for non-invasive treatment of varicose veins and other
benign vascular lesions, as well as other clinical applications.
Financial Security Assurance Holdings Ltd. Financial Security Assurance
Holdings Ltd., through its wholly-owned subsidiary, Financial Security
Assurances, Inc., is a monoline financial guaranty insurer of asset-backed
securities and municipal bonds. FSA insures asset-backed obligations that are
backed by residential mortgage loans, consumer or trade receivables,
securities, general obligation bonds or other assets.
FINOVA Group, Inc. FINOVA Group, Inc. is a commercial finance company
providing a broad range of capital market and financing products to midsize
business. The company operates through its commercial finance group, specialty
finance group and capital markets group.
FIRSTPLUS Financial Group, Inc. FIRSTPLUS Financial Group, Inc. is a consumer
finance company. Through its subsidiaries, the company originates, purchases,
services and securitizes consumer finance receivables. FIRSTPLUS operates in
the United States.
Health Care and Retirement Corporation. Health Care and Retirement Corporation
provides long-term care, skilled nursing and rehabilitative services in the
United States. The company operates approximately 128 long-term care centers
with 16,500 beds located in 16 states. Health Care also provides and develops
specialty services at a few of its centers, such as assisted living and
subacute care services for Alzheimer's Disease.
Interstate Bakeries Corporation. Interstate Bakeries Corporation, and its
subsidiaries, produce and distribute baked goods. The company bakes a variety
of breads, buns and rolls under the names "Butternut" , "Merita"
and "Weber's" among others. Interstate sells its breads in the
southern, southwestern and western United States. The company also bakes and
sells cakes and breakfast products under the "Dolly Madison Bakery"
name.
Jacor Communications, Inc. Jacor Communications, Inc. owns and operates 61
radio stations in the United States. The company also owns one television
station and a radio sales and marketing business. The radio stations have
diversified programming which include classic rock, news, sports and talk,
country, rock and adult contemporary.
Lear Corporation. Lear Corporation manufactures and distributes automobile and
light truck seat systems. Products include seat systems, seat frames, seat
covers and other seat components. The company sells its products to customers
worldwide.
Lincare Holdings, Inc. Lincare Holdings, Inc. provides oxygen and other
respiratory therapy services to in-home patients typically suffering from
emphysema, chronic bronchitis, and asthma. The company serves more than
135,000 customers in 39 states.
Linear Technology Corporation. Linear Technology Corporation designs,
manufactures and markets a line of linear integrated circuits. The company's
products include telecommunications, computers, computer peripherals, cellular
telephones, process controls, automation products and satellites. Linear
markets its products worldwide.
McKesson Corporation. McKesson Corporation is a provider of health care
products and services. The company, through its McKesson Drug Co., Medis
Health & Pharmaceutical Services, McKesson Water Products and General Medical
subsidiaries, distributes its pharmaceutical and health care products and
bottled water in North America.
Mylan Laboratories, Inc. Mylan Laboratories, Inc. develops, licenses,
manufactures, markets and distributes generic and proprietary pharmaceutical
and wound care products. The company sells its products to pharmaceutical
wholesalers and distributors, drugstore chains, drug manufacturers and public
and governmental agencies. Mylan operates distribution centers in Greensboro,
North Carolina and Reno, Nevada.
Network Associates, Inc. Network Associates, Inc. supplies enterprise network
security and management solutions. The company's products are marketed under
the brand names "Total Virus Defense" , "Total Network Security"
, "Total Network Visibility" and "Total ServiceDesk" .
Old Republic International Corporation. Old Republic International Corporation
is an insurance holding company whose subsidiaries market, underwrite, and
provide risk management and reinsurance services for a variety of coverages in
the property and liability, mortgage guaranty, title, life, and health fields.
Pediatrix Medical Group, Inc. Pediatrix Medical Group, Inc. provides physician
practice management services to hopsital-based neonatal intensive care units
("NICUs" ), pediatric intensive care units ("PICUs" ) and
pediatrics departments. The company currently provides its services to 99
NICUs, eight PICUs and three pediatrics departments in 20 states and Puerto
Rico. Pediatrix also employs or contracts with about 250 physicians.
Rental Service Corporation. Rental Service Corporation is a consolidator in
the equipment rental industry. The company serves the needs of the industrial,
manufacturing and construction markets. Rental Service operates in the United
States through 142 locations.
Ross Stores, Inc. Ross Stores, Inc. operates a national chain of off-price
retail apparel stores. The stores offer brand-name apparel, apparel-related
merchandise for the entire family, fragrances, gift items and linens for the
home. The company operates approximately 315 off-price stores nationwide.
Safeskin Corporation. Safeskin Corporation manufactures hypoallergenic
disposable latex medical examination gloves. The company's products are
marketed in the United States. Safeskin produces gloves at its manufacturing
facilities in Southeast Asia using proprietary formulations and processes.
SCI Systems, Inc. SCI Systems, Inc. is a diversified electronics manufacturer
whose products and systems are supplied to a variety of aerospace, commercial
and industrial customers. The company operates 24 facilities in 10 countries.
Shared Medical Systems Corporation. Shared Medical Systems Corporation
provides health information solutions to customers in 20 countries and
territories across North America and Europe. The Company's customers include
integrated health networks, multientity health corporations, community health
information networks, hospitals, physician groups and managed services
organizations.
Tech Data Corporation. Tech Data Corporation distributes microcomputer
hardware and software products to value-added resellers, corporate resellers,
retailers and direct marketers. The company distributes products throughout
the United States, Canada, Latin America, Germany, France, Switzerland and
Austria.
TJX Companies, Inc. TJX Companies, Inc. operates off-price apparel store
chains. The company's store chains include "T.J. Maxx" , "Winners
Apparel Ltd." , "HomeGoods" and "Marshalls" . TJX is
currently developing "T.K. Max" , an off-price apparel concept
operating stores in the United Kingdom.
Torchmark Corporation. Torchmark Corporation is an insurance and financial
services holding company. The company's subsidiaries offer life and health
insurance, personal financial planning and mutual fund management through its
Waddell and Reed subsidiary. Torchmark is licensed to sell insurance in all 50
states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, New
Zealand and Canada.
Total Renal Care Holdings, Inc. Total Renal Care Holdings, Inc. provides
integrated dialysis services in the United States for patients suffering from
chronic kidney failure. The company owns and operates centers and home
programs in 17 states, as well as Washington, DC, Guam and the United Kingdom.
Total also provides services to in-patients at 120 hospitals and operates
laboratory and pharmacy facilities.
Universal Health Services, Inc. Universal Health Services, Inc. owns and
operates 35 general acute care hospitals and psychiatric-care facilities
located throughout the United States. The company provides a variety of
services including laboratory services, specialized medical service
arrangements, medical office building leasing and physician recruitment.
Veritas DGC Inc. Veritas DGC Inc. provides land, transition zone and
marine-based seismic data acquisition; seismic data processing; and
multi-client data sales. The company provides its services to the petroleum
industry in selected markets worldwide.
Wellpoint Health Networks, Inc. Wellpoint Health Networks, Inc. is a managed
care company that serves the healthcare needs of medical and specialty members
located in California and other parts of the United States. The company offers
a broad spectrum of network health plans provided through its health
maintenance organizations, preferred provider organizations and specialty
managed care networks.
General. Each Trust consists of (a) the Equity Securities (including contracts
for the purchase thereof) listed under "Portfolio" 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 a 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.
RISK FACTORS
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General. An investment in Units should be made with an understanding of the
risks which an investment in common stocks entails, including the risk that
the financial condition of the issuers of the Equity Securities or the general
condition of the common stock market may worsen and the value of the Equity
Securities and therefore the value of the Units may decline. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions of
the issuers change. These perceptions are based on unpredictable factors
including expectations regarding government, economic, monetary and fiscal
policies, inflation and interest rates, economic expansion or contraction, and
global or regional political, economic or banking crises. Shareholders of
common stocks have rights to receive payments from the issuers of those common
stocks that are generally subordinate to those of creditors of, or holders of
debt obligations or preferred stocks of, such issuers. Shareholders of common
stocks of the type held by the Trusts have a right to receive dividends only
when and if, and in the amounts, declared by each issuer's board of directors
and have a right to participate in amounts available for distribution by such
issuer only after all other claims on such issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common stock or
the rights of holders of common stock with respect to assets of the issuer
upon liquidation or bankruptcy. The value of common stocks is subject to
market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Equity Securities in a portfolio may be expected to
fluctuate over the life of the Trusts to values higher or lower than those
prevailing on the Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison
with the rights of creditors of, or holders of debt obligations or preferred
stocks issued by, the issuer. Cumulative preferred stock dividends must be
paid before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stockholders are also generally entitled to rights
on liquidation which are senior to those of common stockholders.
An investment in the Small-Cap Growth Trust should be made with an
understanding of the risks of investing in smaller companies. Smaller
companies have historically shown rates of sales, earnings, growth and share
price appreciation that exceed those of larger companies, however, such
companies also generally have limited product lines, markets or financial
resources, may lack management depth or experience, and may be more vulnerable
to adverse general market or economic developments than large companies.
Smaller companies may distribute, sell or produce products which have only
recently been brought to market and may be dependent on key personnel. The
prices of small company stocks are often more volatile than prices associated
with large company stocks and can display abrupt or erratic movements at times
due to limited trading volumes and publicly available information. Also,
because smaller companies normally have fewer shares outstanding and these
shares trade less frequently than large companies, it may be more difficult
for the Small-Cap Growth Trust to buy and sell significant amounts of such
shares without an unfavorable impact on prevailing market prices.
The Mid-Cap Growth Trust is concentrated in issuers within the health care
industry. Accordingly, an investment in Units should be made with an
understanding of the risks associated with companies in the health care
industry. Because certain Securities are issued by companies involved in a
variety of sectors within the health care industry, each such Security may be
subject to risks specific to the company's sector. The companies included in
the Trust portfolio may include companies involved in research on antibodies,
anti-infectives, biomaterials, blood substitutes, diagnostic imaging, drug
delivery, drug discovery, drug design, genomics, immunology, neurosciences,
novel manufacturing technologies, oncology, services including drug
development, care of the aged, information technology, and drug distribution,
and vaccines. Health care companies are subject to governmental regulation of
their products and services, a factor which could have a significant
unfavorable effect on the price and availability of such products or services.
Furthermore, such companies face the risk of patent protection for drug or
medical products and the risk that rapid technological advances, which are
typical within the industry, will render their products obsolete. The success
of certain issuers depends on the commercial viability of a limited number of
products or services. The research and development costs of bringing a drug to
market are substantial, and include lengthy governmental review processes and
rigorous clinical testing with no guarantee that the drug, product or service
will ever come to market or will achieve acceptance by the medical community
if brought to market. Such companies may also have persistent losses during a
new product's transition from development to production, and revenue patterns
may be erratic. In addition, health care facility operators may be affected by
events and conditions including, among other things, demand for services, the
ability of the facility to provide the services required, physicians'
confidence in the facility, management capabilities, competition with other
hospitals, efforts by insurers and governmental agencies to limit rates,
legislation establishing state rate-setting agencies, expenses, government
regulation, the cost and possible unavailability of malpractice insurance and
Medicaid and other similar third party payor programs. Legislative proposals
concerning health care have been under consideration by state and federal
legislatures in recent years. These proposals span a wide range of topics,
including costs and price controls (which might include a freeze on the prices
of prescription drugs), national health insurance, incentives for competition
in providing health care services, tax incentives and penalties related to
health care insurance premiums and promotion of pre-paid health care plans. It
is impossible to predict the effect of any of these proposals, if adopted, on
the issuers of the Securities.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Equity Securities may depend on whether dealers will make a market in
the Equity Securities. There can be no assurance that a market will be made
for any of the Equity Securities, that any market for the Equity Securities
will be maintained or of the liquidity of the Equity Securities in any markets
made. In addition, the Trusts may be restricted under the Investment Company
Act of 1940 from selling Equity Securities to the Sponsor. The price at which
the Equity Securities may be sold to meet redemptions, and the value of the
Trusts, will be adversely affected if trading markets for the Equity
Securities are limited or absent.
Unitholders have the option to have their Units rolled over into a new trust
at the first Special Redemption Date. Unitholders who sell or redeem their
Units prior to holding such Units for more than 18 months will not benefit
from the reduced federal long-term capital gains tax rate of 20%. For example,
Unitholders who elect to become Rollover Unitholders on or prior to the first
Special Redemption Date will not benefit from this reduced tax rate. Of
course, there can be no assurance that Unitholders will realize capital gains
upon the disposition of Units or Securities. Unitholders who hold Units after
the first Special Redemption Date should note that this rollover process could
cause the value of the Trust to fall below the Minimum Termination Value
stated under "Summary of Essential Financial Information" and could
result in a termination of the Trust before the Mandatory Termination Date.
This could cause a Unitholder who holds Units after the first Special
Redemption Date to receive a distribution of Unit proceeds prior to holding
such Units for more than 18 months.
The Trust Agreement authorizes the Sponsor to increase the size of each Trust
and the number of Units thereof by the deposit of additional Securities, or
cash (or a letter of credit) with instructions to purchase additional
Securities, in the Trust and issuance of a corresponding number of additional
Units. If the Sponsor deposits cash, existing and new investors may experience
a dilution of their investments and reduction in their anticipated income
because of fluctuations in the prices of the Securities between the time of
the cash deposit and the purchase of the Securities and because the Trusts
will pay the associated brokerage fees.
As described under "Trust Operating Expenses," all of the expenses of
the Trusts will be paid from the sale of Securities. It is expected that such
sales will be made at the end of the initial offering period and each month
thereafter through termination of the Trusts. Such sales will result in
capital gains and losses and may be made at times and prices which adversely
affect the Trusts. For a discussion of the tax consequences of such sales, see
"Federal Taxation."
Unitholders will be unable to dispose of any of the Equity Securities, as
such, and will not be able to vote the Equity Securities. As the holder of the
Equity Securities, the Trustee will have the right to vote all of the voting
stocks in the Trusts and will vote such stocks in accordance with the
instructions of the Sponsor. In the absence of any such instructions by the
Sponsor, the Trustee will vote such stocks so as to insure that the stocks are
voted as closely as possible in the same manner and the same general
proportion as are shares held by owners other than the Trusts.
FEDERAL TAXATION
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General. The following is a general discussion of certain of the Federal
income tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to investors who hold the Units as capital
assets (generally, property held for investment) within the meaning of Section
1221 of the Internal Revenue Code of 1986 (the "Code" ). Unitholders
should consult their tax advisers in determining the federal, state, local and
any other tax consequences of the purchase, ownership and disposition of Units
in the 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 each 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 automatically reinvested (see "Rights of
Unitholders--Reinvestment Option" ).
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, liquidation, redemption, or otherwise) or
upon the sale or redemption of Units by such Unitholder (except to the extent
an in kind distribution of stock is received by such Unitholder as described
below). The price a Unitholder pays for his Units, generally including sales
charges, is allocated among his pro rata portion of each Security held by the
Trust (in proportion to the fair market values thereof on the valuation date
nearest to the date the Unitholder purchases his Units) in order to determine
his tax basis for his pro rata portion of each Security held by the Trust. It
should be noted that certain legislative proposals have been made which could
affect the calculation of basis for Unitholders holding securities that are
substantially identical to the Securities. Unitholders should consult their
own tax advisors 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 a Security held by the
Trust is taxable as ordinary income to the extent of such corporation's
current and accumulated "earnings and profits" . A Unitholder's pro
rata portion of dividends paid on such Security which 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). Unitholders should consult their tax advisers
regarding the recognition of gains and losses for Federal income tax purposes.
In particular, a Rollover Unitholder should be aware that a Rollover
Unitholder's loss, if any, incurred in connection with the exchange of Units
for units in the next new Trust series (the "New Trust" ) will
generally be disallowed with respect to the disposition of any Securities
pursuant to such exchange to the extent that such Unitholder is considered the
owner of substantially identical securities under the wash sale provisions of
the Code taking into account such Unitholder's deemed ownership of the
securities underlying the Units in the New Trust in the manner described
above, if such substantially identical securities were acquired within a
period beginning 30 days before and ending 30 days after such disposition.
However, any gains incurred in connection with such an exchange by a Rollover
Unitholder would be recognized. Unitholders should consult their tax advisers
regarding the recognition of gains and losses for Federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes sales
charges, and such charges are not deductible. A portion of the sales charge
for the Trust is deferred. The income (or proceeds from redemption) a
Unitholder must take into account for Federal income tax purposes is not
reduced by amounts deducted to pay the deferred sales charge. Unitholders
should consult their own tax advisers as to the income tax consequences of the
deferred sales charge.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such
Unitholder's pro rata portion of dividends received by the Trust (to the
extent such dividends are taxable as ordinary income, as discussed above, and
are attributable to domestic corporations) in the same manner as if such
corporation directly owned the Securities paying such dividends (other than
corporate 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 period
requirement is met. Moreover, the allowable percentage of the deduction will
be reduced from 70% if a corporate Unitholder owns certain stock (or Units)
the financing of which is directly attributable to indebtedness incurred by
such corporation. It should be noted that various legislative proposals that
would affect the dividends received deduction have been introduced.
Unitholders should consult with their tax advisers with respect to the
limitations on and possible modifications to the dividends received deduction.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. It should be noted that as a result of the Tax Reform Act of 1986,
certain miscellaneous itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be deductible by
an individual only to the extent they exceed 2% of such individual's adjusted
gross income. Unitholders may be required to treat some or all of the expenses
of the Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by the
Trust or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if the
Unitholder disposes of a Unit (although losses incurred by Rollover
Unitholders may be subject to disallowance, as discussed above). For taxpayers
other than corporations, net capital gain (which is defined as net long-term
capital gain over net short-term capital loss for the taxable year) is subject
to a maximum marginal stated tax rate of either 28% or 20%, depending upon the
holding periods of the capital assets. 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. Generally, capital gains
realized from assets held for more than one year but not more than 18 months
are taxed at a maximum marginal stated tax rate of 28% and capital gains
realized from assets (with certain exclusions) held for more than 18 months
are taxed at a maximum marginal stated tax rate of 20% (10% in the case of
certain taxpayers in the lowest tax bracket). Further, capital gains realized
from assets held for one year or less are taxed ar the same rates as ordinary
income. Legislation is currently pending that provides the appropriate
methodology that should be applied in netting the realized capital gains and
losses. Such legislation is proposed to be effective retroactively for tax
years ending after May 6, 1997. Note that the date on which a Unit is acquired
(i.e., the "trade date" ) is excluded for purposes of determining the
holding period of the Unit. It should be noted that legislative proposals are
introduced from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed.
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 or she is deemed thereby to have
disposed of his entire pro rata interest in all the assets of the Trust
including his pro rata portion of all Securities represented by a Unit. The
Taxpayer Relief Act of 1997 (the "1997 Tax Act" ) includes provisions
that treat certain transactions designed to reduce or eliminate risk of loss
and opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts, or similar transactions) as
constructive sales for purposes of recognition of gain (but not loss) and for
purposes of determining the holding period. Unitholders should consult their
own tax advisors with regard to any such constructive sale rules.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the Trust. As discussed in "Rights of
Unitholders--Redemption of Units," under certain circumstances a
Unitholder tendering Units for redemption may request an In Kind Distribution.
A Unitholder may also under certain circumstances request an In Kind
Distribution upon the termination of the Trust. See "Rights of
Unitholders--Redemption of Units" . The Unitholder requesting an In Kind
Distribution will be liable for expenses related thereto (the "
Distribution Expenses" ) and the amount of such In Kind Distribution will
be reduced by the amount of the Distribution Expenses. See "Rights of
Unitholders--Redemption of Units" . As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust's assets for
federal income tax purposes. The receipt of an In Kind Distribution will
result in a Unitholder receiving an undivided interest in whole shares of
stock plus, possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution
with respect to each Security owned by the Trust will depend on whether or not
a Unitholder receives cash in addition to Securities. A "Security" for
this purpose is a particular class of stock issued by a particular
corporation. A Unitholder will not recognize gain or loss if a Unitholder only
receives Securities in exchange for his or her pro rata portion of the
Securities held by the Trust. However, if a Unitholder also receives cash in
exchange for a fractional share of a Security held by the Trust, such
Unitholder will generally recognize gain or loss based upon the difference
between the amount of cash received by the Unitholder and his tax basis in
such fractional share of a Security held by the Trust.
Because the Trust will own many Securities, a Unitholder who requests an In
Kind Distribution will have to analyze the tax consequences with respect to
each Security owned by the Trust. The amount of taxable gain (or loss)
recognized upon such exchange will generally equal the sum of the gain (or
loss) recognized under the rules described above by such Unitholder with
respect to each Security owned by the Trust. Unitholders who request an In
Kind Distribution are advised to consult their tax advisers in this regard.
As discussed in "Rights of Unitholders--Special Redemption and Rollover in
New Trust," a Unitholder may elect to become a Rollover Unitholder. To the
extent a Rollover Unitholder exchanges his Units for Units of the New Trust in
a taxable transaction, such Unitholder will recognize gains, if any, but
generally will not be entitled to a deduction for any losses recognized upon
the disposition of any Securities pursuant to such exchange to the extent that
such Unitholder is considered the owner of substantially identical securities
under the wash sale provisions of the Code taking into account such
Unitholder's deemed ownership of the securities underlying the Units in the
New Trust in the manner described above, if such substantially identical
securities were acquired within a period beginning 30 days before and ending
30 days after such disposition under the wash sale provisions contained in
Section 1091 of the Code. In the event a loss is disallowed under the wash
sale provisions, special rules contained in Section 1091(d) of the Code apply
to determine the Unitholder's tax basis in the securities acquired. Rollover
Unitholders are advised to consult their tax advisers.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax basis
in his Units will generally equal the price paid by such Unitholder for his
Units. The cost of the Units is allocated among the Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of
each Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary
income as described above.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the
Unitholder has not been notified by the Internal Revenue Service that payments
to the Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by the Trust to such Unitholder (including amounts
received upon the redemption of Units) will be subject to back-up withholding.
Distributions by the Trust (other than those that are not treated as United
States source income, if any) will generally be subject to United States
income taxation and withholding in the case of Units held by non-resident
alien individuals, foreign corporations or other non-United States persons.
Such persons should consult their tax advisers.
At the termination of the Trust, the Trustee will furnish to each Unitholder a
statement containing information relating to the dividends received by the
Trust on the Securities, the gross proceeds received by the Trust from the
disposition of any Security (resulting from redemption or the sale of any
Security), and the fees and expenses paid by the Trust. The Trustee will also
furnish annual information returns to Unitholders and to the Internal Revenue
Service.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of special counsel to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the
Trust will be treated as the income of the Unitholders under the existing
income tax laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S. Unitholders
("U.S. Unitholders" ) with regard to federal and certain aspects of New
York State and City income taxes. Unitholders may be subject to taxation in
New York or in other jurisdictions and should consult their own tax advisers
in this regard. As used herein, the term "U.S. Unitholder" means an
owner of a Unit of the Trust that (a) is (i) for United States Federal income
tax purposes a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unitholder in
paragraph (a) but whose income from a Unit is effectively connected with such
Unitholder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and gain on
the Units will be taxable.
TRUST OPERATING EXPENSES
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Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trusts. However, Van Kampen
American Capital Investment Advisory Corp., which is an affiliate of the
Sponsor, will receive an annual supervisory fee which is not to exceed the
amount set forth under "Summary of Essential Financial Information" ,
for providing portfolio supervisory services for the Trusts. Such fee (which
is based on the number of Units outstanding on January 1 of each year except
during the initial offering period in which event the calculation is based on
the number of Units outstanding at the end of the month of such calculation)
may exceed the actual costs of providing such supervisory services for these
Trusts, but at no time will the total amount received for portfolio
supervisory services rendered to all unit investment trusts sponsored by the
Sponsor for which the Supervisor provides portfolio supervisory services in
any calendar year exceed the aggregate cost to the Supervisor of supplying
such services in such year. In addition, American Portfolio Evaluation
Services, which is a division of Van Kampen American Capital Investment
Advisory Corp., shall receive for regularly providing evaluation services to
the Trust the annual per Unit evaluation fee set forth under "Summary of
Essential Financial Information" (which is based on the number of Units
outstanding on January 1 of each year for which such compensation relates
except during the initial offering period in which event the calculation is
based on the number of Units outstanding at the end of the month of such
calculation) for regularly evaluating the Trust portfolios. The fees set forth
herein are payable as described under "General" below. Both of the
foregoing fees may be increased without approval of the Unitholders by amounts
not exceeding proportionate increases under the category "All Services
Less Rent of Shelter" in the Consumer Price Index published by the United
States Department of Labor or, if such category is no longer published, in a
comparable category. The Sponsor will receive sales commissions and may
realize other profits (or losses) in connection with the sale of Units and the
deposit of the Securities as described under "Public Offering--Sponsor and
Other Compensation" .
Trustee's Fee. For its services the Trustee will receive the annual per Unit
fee from the Trusts set forth under "Summary of Essential Financial
Information" (which is based on the number of Units outstanding at the end
of the month of such calculation until the end of the initial offering period
at which time such calculation is based on the number of Units outstanding on
such date). The fees set forth herein are payable as described under "
General" below. The Trustee benefits to the extent there are funds for
future distributions, payment of expenses and redemptions in the Capital and
Income Accounts since these Accounts are non-interest bearing to Unitholders
and the amounts earned by the Trustee are retained by the Trustee. Part of the
Trustee's compensation for its services to the Trusts is expected to result
from the use of these funds. Such fees may be increased without approval of
the Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. For a discussion of the
services rendered by the Trustee pursuant to its obligations under the Trust
Agreement, see "Rights of Unitholders--Reports Provided" and "
Trust Administration" .
Miscellaneous Expenses. Expenses incurred in establishing each Trust,
including the cost of the initial preparation of documents relating to the
Trust (including the Prospectus, Trust Agreement and closing documents),
federal and state registration fees, the initial fees and expenses of the
Trustee, legal and accounting expenses, payment of closing fees and any other
out-of-pocket expenses, will be paid by the Trust and amortized over two
years. The following additional charges are or may be incurred by a Trust: (a)
normal expenses (including the cost of mailing reports to Unitholders)
incurred in connection with the operation of the Trust, (b) fees of the
Trustee for extraordinary services, (c) expenses of the Trustee (including
legal and auditing expenses) and of counsel designated by the Sponsor, (d)
various governmental charges, (e) expenses and costs of any action taken by
the Trustee to protect the Trust and the rights and interests of Unitholders,
(f) indemnification of the Trustee for any loss, liability or expenses
incurred in the administration of the Trust without negligence, bad faith or
wilful misconduct on its part, (g) accrual of costs associated with
liquidating securities and (h) expenditures incurred in contacting Unitholders
upon termination of the Trust. The fees set forth herein are payable as
described under "General" below.
General. During the initial offering period of each Trust, all of the fees and
expenses of the Trust will accrue on a daily basis and will be charged to the
Trust, in arrears, at the end of the initial offering period. After the
initial offering period, all of the fees and expenses of a Trust will accrue
on a daily basis and will be charged to the Trust, in arrears, on a monthly
basis. The fees and expenses are payable out of the Capital Account. When such
fees and expenses are paid by or owing to the Trustee, they are secured by a
lien on the related Trust's portfolio. If the balance in the Capital Account
is insufficient to provide for amounts payable by a Trust, the Trustee has the
power to sell Equity Securities to pay such amounts. It is expected that the
balance in the Capital Account will be insufficient to provide for amounts
payable by the Trusts and that Equity Securities will be sold from the Trusts
to pay such amounts. These sales may result in capital gains or losses to
Unitholders. See "Federal Taxation" .
PUBLIC OFFERING
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General. Units are offered at the Public Offering Price. During the initial
offering period and for secondary market transactions after the initial
offering period the Public Offering Price is based on the aggregate underlying
value of the Securities, the initial sales charge described below, and cash,
if any, in the Income and Capital Accounts. The initial sales charge is equal
to the difference between the total sales charge for a Trust (3.25% of the
Public Offering Price) and the deferred sales charge ($0.225 per Unit). The
monthly deferred sales charge will begin accruing on a daily basis on April
28, 1998 and will continue to accrue through December 27, 1998. The monthly
deferred sales charge will be charged, in arrears, commencing May 28, 1998 and
will be charged on the 28th day of each month thereafter through December 28,
1998. If any deferred sales charge payment date is not a business day, the
payment will be charged on the next business day. Unitholders will be assessed
only that portion of the deferred sales charge accrued from the time they
became Unitholders of record. Units purchased subsequent to the initial
deferred sales charge payment will be subject to only that portion of the
deferred sales charge payments not yet collected. The deferred sales charges
will be paid from funds in the Capital Account, if sufficient, or from the
periodic sale of Securities. The sales charge applicable to quantity purchases
is reduced on a graduated basis to any person acquiring 10,000 or more Units
as follows:
<TABLE>
<CAPTION>
Aggregate Number of Units
Purchased* Sales Charge Per Unit
- --------------------------------- --------------------------------------------
<S> <C>
10,000-24,999 ................... 3.00%
25,000-49,999 ................... 2.75
50,000-99,999 ................... 2.50
100,000 or more ................. 2.00
*The breakpoint sales charges are also applied on a dollar basis utilizing a
breakpoint equivalent in the above table of $10 per Unit and will be applied
on whichever basis is more favorable to the investor. The breakpoints will be
adjusted to take into consideration purchase orders stated in dollars which
cannot be completely fulfilled due to the requirement that only whole Units
be issued.
</TABLE>
Any sales charge reduction will primarily be the responsibility of the selling
broker, dealer or agent. This reduced sales charge structure will apply on all
purchases by the same person from any one dealer of units of Van Kampen
American Capital-sponsored unit investment trusts which are being offered in
the initial offering period (a) on any one day (the "Initial Purchase
Date" ) or (b) on any day subsequent to the Initial Purchase Date if (1)
the units purchased are of a unit investment trust purchased on the Initial
Purchase Date, and (2) the person purchasing the units purchased a sufficient
amount of units on the Initial Purchase Date to qualify for a reduced sales
charge on such date. In the event units of more than one trust are purchased
on the Initial Purchase Date, the aggregate dollar amount of such purchases
will be used to determine whether purchasers are eligible for a reduced sales
charge. Such aggregate dollar amount will be divided by the public offering
price per unit (on the day preceding the date of purchase) of each respective
trust purchased to determine the total number of units which such amount could
have purchased of each individual trust. Purchasers must then consult the
applicable trust's prospectus to determine whether the total number of units
which could have been purchased of a specific trust would have qualified for a
reduced sales charge and, if so qualified, the amount of such reduction.
Assuming a purchased qualified for a sales charge reduction or reductions, to
determine the applicable sales charge reduction or reductions it is necessary
to accumulate all purchases made on the Initial Purchase Date and all
purchases made in accordance with (b) above. Units purchased in the name of
the spouse of a purchaser or in the name of a child of such purchaser ("
immediate family members" ) will be deemed for the purposes of calculating
the applicable sales charge to be additional purchases by the purchaser. The
reduced sales charges will also be applicable to a trustee or other fiduciary
purchasing securities for one or more trust estate or fiduciary accounts.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge
reduction for quantity purchases) less the concession the Sponsor typically
allows to brokers and dealers for purchases (see "Public Offering--Unit
Distribution" ) by (1) investors who purchase Units through registered
investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management service, or provide such
services in connection with the establishment of an investment account for
which a comprehensive "wrap fee" charge is imposed, (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity, (3) any person who for at least 90 days, has been an
officer, director or bona fide employee of any firm offering Units for sale to
investors or their immediate family members (as described above) and (4)
officers and directors of bank holding companies that make Units available
directly or through subsidiaries or bank affiliates. Notwithstanding anything
to the contrary in this Prospectus, such investors, bank trust departments,
firm employees and bank holding company officers and directors who purchase
Units through this program will not receive sales charge reductions for
quantity purchases.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law,
fathers-in-law, sons-in-law and daughters-in-law, and trustees, custodians or
fiduciaries for the benefit of such persons) of Van Kampen American Capital
Distributors, Inc. and its affiliates, dealers and their affiliates, and
vendors providing services to the Sponsor may purchase Units at the Public
Offering Price less the applicable dealer concession.
During the initial offering period of the Trusts, unitholders of unaffiliated
unit investment trusts having an investment objective similar to the
investment objective of the Trusts may utilize proceeds received upon
termination or upon redemption immediately preceding termination of such
unaffiliated trust to purchase Units of the Trusts at the Public Offering
Price per Unit less 1%.
During the initial offering period, unitholders of any Van Kampen American
Capital-sponsored unit investment trust may utilize their redemption or
termination proceeds to purchase Units of these Trusts at the Public Offering
Price per Unit less 1%.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
accordance with fluctuations in the prices of the underlying Securities.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities an amount
equal to the difference between the total sales charge of 3.25% of the Public
Offering Price and the deferred sales charge ($0.225 per Unit) and dividing
the sum so obtained by the number of Units outstanding. The Public Offering
Price per Unit shall include the proportionate share of any cash held in the
Income and Capital Accounts. Such price determination as of the close of the
relevant stock market on the day before the Initial Day of Deposit was made on
the basis of an evaluation of the Securities prepared by Interactive Data
Corporation, a firm regularly engaged in the business of evaluating, quoting
or appraising comparable securities. Thereafter, the Evaluator on each
business day will appraise or cause to be appraised the value of the
underlying Securities as of the Evaluation Time and will adjust the Public
Offering Price of the Units commensurate with such valuation. Such Public
Offering Price will be effective for all orders received prior to the
Evaluation Time on each such day. Orders received by the Trustee or Sponsor
for purchases, sales or redemptions after that time, or on a day which is not
a business day for a Trust, will be held until the next determination of
price. Unitholders who purchase Units subsequent to the Initial Date of
Deposit will pay an initial sales charge equal to the difference between the
total sales charge and the deferred sales charge ($0.225 per Unit) and will be
assessed a deferred sales charge of $0.225 per Unit as set forth in "
Public Offering--General" . Effective December 28, 1998, the secondary
market sales charge will be 2.75%. The Sponsor currently does not intend to
maintain a secondary market after July 27, 1999.
The aggregate underlying value of the Equity Securities during the initial
offering period is determined on each business day by the Evaluator in the
following manner: if the Equity Securities are listed on a national securities
exchange, this evaluation is generally based on the closing sale prices on
that exchange (unless it is determined that these prices are inappropriate as
a basis for valuation) or, if there is no closing sale price on that exchange,
at the closing ask prices. If the Equity Securities are not so listed or, if
so listed and the principal market therefore is other than on the exchange,
the evaluation shall generally be based on the current ask price on the
over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the value of
the Equity Securities on the ask side of the market or (c) by any combination
of the above.
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities in a Trust
but rather the entire pool of Securities, taken as a whole, which are
represented by the Units.
Unit Distribution. During the initial offering period, Units will be
distributed to the public by the Sponsor, broker-dealers and others at the
Public Offering Price. Upon the completion of the initial offering period,
Units repurchased in the secondary market, if any, may be offered by this
Prospectus at the secondary market Public Offering Price in the manner
described above.
The Sponsor intends to qualify the Units for sale in a number of states.
Brokers, dealers and others will be allowed a concession or agency commission
in connection with the distribution of Units during the initial offering
period as set forth in the following table. A portion of such concessions or
agency commissions represents amounts paid by the Sponsor to such brokers,
dealers and others out of its own assets as additional compensation.
<TABLE>
<CAPTION>
Aggregate Number of Units per Initial Offering Period Concession or
Trust Purchased* Agency Commission per Unit
- --------------------------------- --------------------------------------------
<S> <C>
1 - 9,999 ....................... 2.25%
10,000-24,999.................... 2.00
25,000-49,999.................... 1.90
50,000-99,999.................... 1.75
100,000 or more.................. 1.40
*The breakpoint concessions, agency commissions or additional payments are
also applied on a dollar basis utilizing a breakpoint equivalent in the above
table of $10 per Unit and will be applied on whichever basis is more
favorable to the investor. The breakpoints will be adjusted to take into
consideration purchase orders stated in dollars which cannot be completely
fulfilled due to the requirement that only whole Units be issued.
</TABLE>
In addition to the amounts set forth above, any firm that distributes a total
of 500,000-999,999 Units of a Trust during the initial offering period will be
paid additional compensation by the Sponsor of $0.005 per Unit distributed; or
any firm that distributes a total of 1,000,000 - 1,999,999 Units of a Trust
during the initial offering period will be paid additional compensation by the
Sponsor of $0.01 per Unit distributed; or any firm that distributes a total of
2,000,000 - 2,999,999 Units of a Trust during the initial offering period will
be paid additional compensation by the Sponsor of $0.015 per Unit distributed;
or any firm that distributes a total of 3,000,000 or more Units of a Trust
during the initial offering period will be paid additional compensation by the
Sponsor of $.02 per Unit distributed. Such additional compensation will be
paid at the end of the initial offering period of a Trust.
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. For transactions involving
Rollover Unitholders, the total concession or agency commission will amount to
1.50% per Unit (or such lesser amount resulting from quantity sales
discounts). For all secondary transactions, the total concession or agency
commission will amount to 70% of the sales charge applicable to the
transaction. Notwithstanding anything to the contrary herein, the total of any
concessions, agency commissions and any additional compensation allowed or
paid to any broker, dealer or other distributor of Units with respect to any
individual transaction, shall in no case exceed the total sales charge
applicable to such transaction.
Certain commercial banks are making Units available to their customers on an
agency basis. A portion of the sales charge (equal to the agency commission
referred to above) is retained by or remitted to the banks. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units;
however, the Glass-Steagall Act does permit certain agency transactions and
the banking regulators have not indicated that these particular agency
transactions are not permitted under such Act. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 100 Units per Trust except as
stated herein. In connection with fully disclosed transactions with the
Sponsor, the minimum purchase requirement will be that number of Units set
forth in the contract between the Sponsor and the related broker or agent. The
Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units and to change the amount of the concession or agency
commission to dealers and others from time to time.
Sponsor and Other Compensation. The Sponsor will receive a gross sales
commission equal to 3.25% of the Public Offering Price of the Units less any
reduced sales charge for purchases as described under "General" above.
Any such discount provided to investors will be borne by the selling dealer or
agent.
In addition, the Sponsor will realize a profit or will sustain a loss, as the
case may be, as a result of the difference between the price paid for the
Securities by the Sponsor and the cost of such Securities to the Trusts on the
Initial Date of Deposit as well as on subsequent deposits. See "Notes to
Portfolios" . The Sponsor has not participated as sole underwriter or as
manager or as a member of the underwriting syndicates or as an agent in a
private placement for any of the Securities. The Sponsor may further realize
additional profit or loss during the initial offering period as a result of
the possible fluctuations in the market value of the Securities after a date
of deposit, since all proceeds received from purchasers of Units.
Broker-dealers, banks and/or others may be eligible to participate in a
program in which such firms receive from the Sponsor a nominal award for each
of their representatives who have sold a minimum number of units of unit
investment trusts created by the Sponsor during a specified time period. In
addition, at various times the Sponsor may implement other programs under
which the sales forces of brokers, dealers, banks and/or others may be
eligible to win other nominal awards for certain sales efforts, or under which
the Sponsor will reallow to such brokers, dealers, banks and/or others that
sponsor sales contests or recognition programs conforming to criteria
established by the Sponsor or participate in sales programs by the Sponsor, an
amount not exceeding the total applicable sales charges on the sales generated
by such persons at the public offering price during such programs. Also, the
Sponsor in its discretion may from time to time pursuant to objective criteria
established by the Sponsor paid fees to qualifying entities for certain
services or activities which are primarily intended to result in sales of
Units of the Trusts. Such payments are made by the Sponsor out of its own
assets, and not out of assets of the Trusts. These programs will not change
the price Unitholders pay for their Units or the amount that the Trusts will
receive from the Units sold.
A person will become the owner of Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor prior
to the date of settlement for the purchase of Units may be used in the
Sponsor's business and may be deemed to be a benefit to the Sponsor, subject
to the limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor currently intends
to maintain a secondary market for Units for the period indicated. In so
maintaining a market, the Sponsor will also realize profits or sustain losses
in the amount of any difference between the price at which Units are purchased
and the price at which Units are resold (which price includes the applicable
sales charge). In addition, the Sponsor will also realize profits or sustain
losses resulting from a redemption of such repurchased Units at a price above
or below the purchase price for such Units, respectively.
Public Market. Although it is not obligated to do so, the Sponsor currently
intends to maintain a market for the Units offered hereby through July 27,
1999 and offer continuously to purchase Units at prices, subject to change at
any time, based upon the aggregate underlying value of the Equity Securities
(computed as indicated under "Offering Price" above and "Rights of
Unitholders--Redemption of Units" ). If the supply of Units exceeds demand
or if some other business reason warrants it, the Sponsor may either
discontinue all purchases of Units or discontinue purchases of Units at such
prices. In the event that a market is not maintained for the Units and the
Unitholder cannot find another purchaser, a Unitholder desiring to dispose of
his Units will be able to dispose of such Units by tendering them to the
Trustee for redemption at the Redemption Price. See "Rights of
Unitholders--Redemption of Units" . A Unitholder who wishes to dispose of
his Units should inquire of his broker as to current market prices in order to
determine whether there is in existence any price in excess of the Redemption
Price and, if so, the amount thereof. Units sold prior to such time as the
entire deferred sales charge on such Units has been collected will be assessed
the amount of the remaining deferred sales charge at the time of sale
(however, Units sold on or prior to the first Special Redemption Date will not
be assessed the unpaid $0.16 per Unit deferred sales charge remaining after
such date).
Tax-Sheltered Retirement Plans. Units are available for purchase in connection
with certain types of tax-sheltered retirement plans, including Individual
Retirement Accounts for the individuals, Simplified Employee Pension Plans for
employees, qualified plans for self-employed individuals, and qualified
corporate pension and profit sharing plans for employees. The purchase of
Units may be limited by the plans' provisions and does not itself establish
such plans.
RIGHTS OF UNITHOLDERS
- --------------------------------------------------------------------------
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units will be evidenced by certificates unless a Unitholder or
the Unitholder's registered broker-dealer makes a written request to the
Trustee that ownership be in book entry form. Units are transferable by making
a written request to the Trustee and, in the case of Units evidenced by a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, and such certificate or
transfer instrument, exactly as his name appears on the records of the Trustee
and on the face of any certificate representing the Units to be transferred
with the signature guaranteed by a participant in the Securities Transfer
Agents Medallion Program ("STAMP" ) or such other signature guarantee
program in addition to, or in substitution for, STAMP as may be accepted by
the Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority. Certificates will be issued in denominations of one Unit or any
whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange. Destroyed, stolen,
mutilated or lost certificates will be replaced upon delivery to the Trustee
of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Distributions of Income and Capital. Any dividends received by the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds from the sales
of Securities to meet redemptions of Units shall be segregated within the
Capital Account from proceeds from the sale of Securities made to satisfy the
fees, expenses and charges of a Trust.
The Trustee will distribute any net income received with respect to any of the
Securities on or about the Income Account Distribution Date to Unitholders of
record on the preceding Record Date. See "Summary of Essential Financial
Information" . Proceeds received on the sale of any Securities, to the
extent not used to meet redemptions of Units, pay the deferred sales charge or
pay expenses, will be distributed on the Capital Account Distribution Date to
Unitholders of record on the preceding Capital Account Record Date. Proceeds
received from the disposition of any of the Securities after a record date and
prior to the following distribution date will be held in the Capital Account
and not distributed until the next distribution date applicable to such
Capital Account. The Trustee is not required to pay interest on funds held in
the Capital or Income Accounts (but may itself earn interest thereon and
therefore benefits from the use of such funds) nor to make a distribution from
the Income or Capital Accounts unless the amount available for distribution
therein shall equal at least $0.01 per Unit.
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account. Because
dividends are not received by the Trusts at a constant rate throughout the
year, such distributions to Unitholders are expected to fluctuate from
distribution to distribution. Persons who purchase Units will commence
receiving distributions only after such person becomes a record owner.
Notification to the Trustee of the transfer of Units is the responsibility of
the purchaser, but in the normal course of business such notice is provided by
the selling broker-dealer.
At the end of the initial offering period and each month thereafter, the
Trustee will deduct from the Capital Account 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 the Income and
Capital Accounts such amounts, if any, as it deems necessary to establish a
reserve for any governmental charges payable out of a Trust. Amounts so
withdrawn shall not be considered a part of a Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Capital
Accounts such amounts as may be necessary to cover redemptions of Units.
It is anticipated that the deferred sales charge will be collected from the
Capital Account. To the extent that amounts in the Capital Account are
insufficient to satisfy the then current deferred sales charge obligation,
Equity Securities may be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made to an
account maintained by the Trustee for purposes of satisfying Unitholders'
deferred sales charge obligations.
Reinvestment Option. In the event that any distribution is made to Unitholders
prior to termination of the Trust, Unitholders will initially have each such
distribution of dividend income, capital gains and/or principal on their Units
automatically reinvested in additional Units under the "Automatic
Reinvestment Option" (to the extent Units may be lawfully offered for sale
in the state in which the Unitholder resides). Unitholders receiving Units
pursuant to participation in the Automatic Reinvestment Option will be subject
to the remaining deferred sales charge payments due on Units (assuming for
these purposes such Units had been outstanding during the primary offering
period). Unitholders may also elect to receive distributions of dividend
income, capital gains and/or principal on their Units in cash. To receive
cash, a Unitholder 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 receive cash will apply to all Units owned by such Unitholder and
such election will remain in effect until changed by the Unitholder.
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market" ) or,
until such time as additional Units cease to be issued by a Trust (see "
The Trusts" ), distributions may be reinvested in such additional Units. If
Units are unavailable in the secondary market, distributions which would
otherwise have been reinvested shall be paid in cash to the Unitholder on the
applicable Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
made at the net asset value for Units as of the Evaluation Time on the related
Income or Capital Distribution Dates. Under the reinvestment plan, a Trust
will pay the Unitholder's distributions to the Trustee which in turn will
purchase for such Unitholder full and fractional Units and will send such
Unitholder a statement reflecting the reinvestment.
Unitholders may also elect to have each distribution of income, capital gains
and/or capital on their Units automatically reinvested in Class A shares of
certain Van Kampen American Capital or Morgan Stanley mutual funds which are
registered in the Unitholder's state of residence. Such mutual funds are
hereinafter collectively referred to as the "Reinvestment Funds" .
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each
Reinvestment Fund describes the investment policies of such fund and sets
forth the procedures to follow to commence reinvestment. A Unitholder may
obtain a prospectus for the respective Reinvestment Funds from Van Kampen
American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181. Texas residents who desire to reinvest may request that a
broker-dealer registered in Texas send the prospectus relating to the
respective fund.
After becoming a participant in a reinvestment plan, each distribution of
income, capital gains and/or capital on the participant's Units will, on the
applicable distribution date, automatically be applied, as directed by such
person, as of such distribution date by the Trustee to purchase shares (or
fractions thereof) of the applicable Reinvestment Fund at a net asset value as
computed as of the close of trading on the New York Stock Exchange on such
date. Unitholders with an existing Guaranteed Reinvestment Option (GRO)
Program account (whereby a sales charge is imposed on distribution
reinvestments) may transfer their existing account into a new GRO account
which allows purchases of Reinvestment Fund shares at net asset value as
described above. Confirmations of all reinvestments by a Unitholder into a
Reinvestment Fund will be mailed to the Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions on his or her
Units in cash. There will be no charge or other penalty for such termination.
The Sponsor, each Reinvestment Fund, and its investment adviser shall have the
right to suspend or terminate the reinvestment plan at any time.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being
distributed, expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. Within a reasonable period of time after
the end of each calendar year, the Trustee shall furnish to each person who at
any time during the calendar year was a registered Unitholder of a Trust a
statement (i) as to the Income Account: income received, deductions for
applicable taxes and for fees and expenses of the Trust, for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (ii) as to the Capital Account: the
dates of disposition of any Securities and the net proceeds received
therefrom, deductions for payment of applicable taxes, fees and expenses of
the Trust held for distribution to Unitholders of record as of a date prior to
the determination and the balance remaining after such distributions and
deductions expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year; (iii) a list of the Securities held by the Trust
and the number of Units outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (v) amounts actually distributed
during such calendar year from the Income and Capital Accounts, separately
stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286 and, in the case of Units
evidenced by a certificate, by tendering such certificate to the Trustee, duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as described above (or by providing satisfactory indemnity, as in
connection with lost, stolen or destroyed certificates) and by payment of
applicable governmental charges, if any. No redemption fee will be charged. On
the third business day following such tender, the Unitholder will generally
receive in cash (unless the redeeming Unitholder elects an In Kind
Distribution as described below) an amount for each Unit equal to the
Redemption Price per Unit next computed after receipt by the Trustee of such
tender of Units. The "date of tender" is deemed to be the date on
which Units are received by the Trustee, except that with respect to Units
received after the applicable Evaluation Time the date of tender is the next
business day as defined under "Public Offering--Offering Price" and
such Units will be deemed to have been tendered to the Trustee on such day for
redemption at the redemption price computed on that day. Units redeemed prior
to such time as the entire deferred sales charge has been collected will be
assessed the amount of the remaining deferred sales charge at the time of
redemption.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by
the Trustee from those designated on a current list provided by the Supervisor
for this purpose. Units so redeemed shall be cancelled. Units tendered for
redemption prior to such time as the entire deferred sales charge on such
Units has been collected will be assessed the amount of the remaining deferred
sales charge at the time of redemption.
Unitholders tendering 1,000 or more Units for redemption may request from the
Trustee, in lieu of a cash redemption, an in kind distribution ("In Kind
Distribution" ) of an amount and value of Securities per Unit equal to the
Redemption Price per Unit as determined as of the evaluation next following
the tender. An In Kind Distribution on redemption of Units will be made by the
Trustee through the distribution of each of the Securities in book-entry form
to the account of the Unitholder's bank or broker-dealer at Depository Trust
Company. The tendering Unitholder will receive his pro rata number of whole
shares of each of the Securities comprising the related Trust portfolio and
cash from the Capital Account equal to the fractional shares to which the
tendering Unitholder is entitled. The Trustee may adjust the number of shares
of any issue of Securities included in a Unitholder's In Kind Distribution to
facilitate the distribution of whole shares, such adjustment to be made on the
basis of the value of Securities on the date of tender. If funds in the
Capital Account are insufficient to cover the required cash distribution to
the tendering Unitholder, the Trustee may sell Securities according to the
criteria discussed above.
To the extent that Securities are redeemed in kind or sold, the size of a
Trust will be, and the diversity of the Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result
in lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the portfolio at the time of
redemption. Special federal income tax consequences will result if a
Unitholder requests an In Kind Distribution. See "Federal Taxation" .
The Redemption Price per Unit (as well as the secondary market Public Offering
Price) will be determined on the basis of the aggregate underlying value of
the Equity Securities, plus or minus cash, if any, in the Income and Capital
Accounts. On the Initial Date of Deposit, the Public Offering Price per Unit
(which includes the initial sales charge) exceeded the values at which Units
could have been redeemed by the amounts shown under "Summary of Essential
Financial Information" . The Redemption Price per Unit is the pro rata
share of each Unit in a Trust determined on the basis of (i) the cash on hand
in the Trust, (ii) the value of the Securities and (iii) dividends receivable
on the Equity Securities trading ex-dividend as of the date of computation,
less (a) amounts representing taxes or other governmental charges payable out
of the Trust, (b) the accrued expenses of the Trust and (c) any unpaid
deferred sales charge payments. The Evaluator may determine the value of the
Equity Securities in the following manner: if the Equity Securities are listed
on a national securities exchange, this evaluation is generally based on the
closing sale prices on that exchange (unless it is determined that these
prices are inappropriate as a basis for valuation) or, if there is no closing
sale price on that exchange, at the closing bid prices. If the Equity
Securities are not so listed or, if so listed and the principal market
therefore is other than on the exchange, the evaluation shall generally be
based on the current bid price on the over-the-counter market (unless these
prices are inappropriate as a basis for evaluation). If current bid prices are
unavailable, the evaluation is generally determined (a) on the basis of
current bid prices for comparable securities, (b) by appraising the value of
the Equity Securities on the bid side of the market or (c) by any combination
of the above.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit.
Special Redemption and Rollover in New Trust. It is expected that a special
redemption will be made of all Units held by any Unitholder (a "Rollover
Unitholder" ) who affirmatively notifies the Trustee in writing that he
desires to rollover his Units by either Rollover Notification Date specified
in the "Summary of Essential Financial Information" .
All Units of Rollover Unitholders will be redeemed on the related Special
Redemption Date and the underlying Securities will be distributed to the
Distribution Agent on behalf of the Rollover Unitholders. On the related
Special Redemption Date (as set forth in "Summary of Essential Financial
Information" ), the Distribution Agent will be required to sell all of the
underlying Securities on behalf of Rollover Unitholders. The sales proceeds
will be net of brokerage fees, governmental charges or any expenses involved
in the sales.
The Distribution Agent will attempt to sell the Securities as quickly as is
practicable on the appropriate Special Redemption Date. The Sponsor does not
anticipate that the period will be longer than one day given that the
Securities are usually liquid. However, certain of the factors discussed under
"Risk Factors" could affect the ability of the Sponsor to sell the
Securities and thereby affect the length of the sale period somewhat. The
liquidity of any Security depends on the daily trading volume of the Security
and the amount that the Sponsor has available for sale on any particular day.
The Rollover Unitholders' proceeds will be invested in the then current series
of the Trusts (the "New Trust" ), if then being offered, which will
contain a portfolio of common stocks of aggressive growth companies and will
have an investment objective of obtaining capital appreciation. The proceeds
of redemption will be used to buy New Trust units in the portfolio as the
proceeds become available.
The Sponsor intends to create a New Trust shortly prior to each Special
Redemption Date, dependent upon the availability and reasonably favorable
prices of the securities included in the New Trust portfolio, and it is
intended that Rollover Unitholders will be given first priority to purchase
the New Trust units. There can be no assurance, however, as to the exact
timing of the creation of the New Trust units or the aggregate number of New
Trust units which the Sponsor will create. The Sponsor may, in its sole
discretion, stop creating new units in a trust portfolio at any time it
chooses, regardless of whether all proceeds of the Special Redemption have
been invested on behalf of Rollover Unitholders. Cash which has not been
invested on behalf of the Rollover Unitholders in New Trust units will be
distributed shortly after the Special Redemption Date.
Any Rollover Unitholder may thus be redeemed out of the Trust and become a
holder of an entirely different unit investment trust in the New Trust with a
different portfolio of Securities. The Rollover Unitholders' Units will be
redeemed and the distributed Securities shall be sold on the Special
Redemption Date. In accordance with the Rollover Unitholders' offer to
purchase the New Trust units, the proceeds of the sales (and any other cash
distributed upon redemption) will be invested in the New Trust at the public
offering price, including a reduced sales charge.
This process of redemption and rollover into a new trust is intended to allow
for the fact that the portfolios selected by the Sponsor is chosen on the
basis of growth potential only for the near term, at which point a new
portfolio is chosen. It is contemplated that a similar process of redemption
and rollover in new unit investment trusts will be available for each
subsequent series of the Trusts.
There can be no assurance that the redemption and rollover in a new trust will
avoid any negative market price consequences stemming from the trading of
large volumes of securities and of the underlying Securities. The above
procedures may be insufficient or unsuccessful in avoiding such price
consequences. In fact, market price trends may make it advantageous to sell or
buy more quickly or more slowly than permitted by these procedures. Investors
should note that, because aggressive growth stocks generally experience stock
price volatility to a greater extent than other securities and because the
Trust is not a "managed" fund, there can be no assurance that these
procedures will result in advantageous sales or purchases of securities or
that any future rollover will occur at an advantageous time. See "Trust
Administration--Portfolio Administration" and "Risk Factors" .
It should also be noted that Rollover Unitholders may realize taxable capital
gains on a Special Redemption and Rollover but, in certain circumstances, will
not be entitled to a deduction for certain capital losses and, due to the
procedures for investing in a new trust, no cash would be distributed at that
time to pay any taxes. Included in the cash for a Special Redemption and
Rollover will be any amount of cash attributable to the last distribution of
dividend income; accordingly, Rollover Unitholders also will not have such
cash distributed to pay any taxes. See "Federal Taxation" . Unitholders
who do not inform the Distribution Agent that they wish to have their Units so
redeemed and liquidated will not realize capital gains or losses due to either
Special Redemption and Rollover.
The Sponsor may for any reason, in its sole discretion, decide not to sponsor
a new trust, without penalty or incurring liability to any Unitholder. If the
Sponsor so decides, the Sponsor shall notify the Unitholders before the
Special Redemption Date would have commenced. The Sponsor may modify the terms
of any subsequent trust. The Sponsor may also modify the terms of a Special
Redemption and Rollover upon notice to the Unitholders prior to the related
Rollover Notification Date specified in the related "Summary of Essential
Financial Information" .
Pursuant to an exemptive order, each terminating Trust (and the Distribution
Agent on behalf of Rollover Unitholders) can sell Securities to a New Trust if
those Securities continue to meet the related investment strategy of the
respective Series. The exemption will enable each Trust to eliminate
commission costs on these transactions. The price for those securities will be
the closing sale price on the sale date on the exchange where the Securities
are principally traded, as certified by the Trustee.
TRUST ADMINISTRATION
- --------------------------------------------------------------------------
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any Units
tendered for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the next
succeeding business day and by making payment therefore to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.
Portfolio Administration. The portfolios of the Trusts are not "
managed" by the Sponsor, Supervisor or the Trustee; their activities
described herein are governed solely by the provisions of the Trust Agreement.
Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Trusts, however, will not be
managed. The Trust Agreement, however, provides that the Sponsor may (but need
not) direct the Trustee to dispose of an Equity Security in certain events
such as the issuer having defaulted on the payment on any of its outstanding
obligations or the price of an Equity Security has declined to such an extent
or other such credit factors exist so that in the opinion of the Sponsor the
retention of such Securities would be detrimental to a Trust. Pursuant to the
Trust Agreement and with limited exceptions, the Trustee may sell any
securities or other properties acquired in exchange for Equity Securities such
as those acquired in connection with a merger or other transaction. If offered
such new or exchanged securities or property, the Trustee shall reject the
offer. However, in the event such securities or property are nonetheless
acquired by a Trust, they may be accepted for deposit in 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 a Trust in
exchange for Equity Securities) are credited to the Capital Account for
distribution to Unitholders or to pay certain costs or expenses of the Trust.
Except as stated under "Trust Portfolios" 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 tendered for redemption and the payment of expenses.
To the extent practicable, the Supervisor may (but is not obligated to)
designate Securities to be sold by the Trustee in order to maintain the
proportionate relationship among the number of shares of individual issues of
Equity Securities in a Trust. To the extent this is not practicable, the
composition and diversity of the Equity Securities in a Trust may be altered.
In order to obtain the best price for a Trust, it may be necessary for the
Supervisor to specify minimum amounts (generally 100 shares) in which blocks
of Equity Securities are to be sold. 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 a Trust then
outstanding, provided that no such amendment or waiver will reduce the
interest in such Trust of any Unitholder without the consent of such
Unitholder or reduce the percentage of Units required to consent to any such
amendment or waiver without the consent of all Unitholders. The Trustee shall
advise the Unitholders of any amendment promptly after execution thereof.
A Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Units then outstanding or by the Trustee when the value of the
Equity Securities owned by the Trust, as shown by any evaluation, is less than
that amount set forth under Minimum Termination Value in "Summary of
Essential Financial Information." A Trust will be liquidated by the
Trustee in the event that a sufficient number of Units not yet sold are
tendered for redemption by the Sponsor so that the net worth of 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 a Trust is liquidated because of the
redemption of unsold Units by the Sponsor, the Sponsor will refund to each
purchaser of Units the entire sales charge paid by such purchaser. The Trust
Agreement will terminate upon the sale or other disposition of the last
Security in a Trust held thereunder, but in no event will it continue beyond
the Mandatory Termination Date stated under "Summary of Essential
Financial Information" .
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trusts. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. The Sponsor shall direct the liquidation of the Securities in such
manner as to effectuate orderly sales and a minimal market impact. In the
event the Sponsor does not so direct, the Securities shall be sold within a
reasonable period and in such manner as the Trustee, in its sole discretion,
shall determine. At least 30 days before the Mandatory Termination Date the
Trustee will provide written notice of any termination to all Unitholders and
will include with such notice a form to enable Unitholders owning 1,000 or
more Units to request an In Kind Distribution rather than payment in cash upon
the termination of a Trust. To be effective, this request must be returned to
the Trustee at least five business days prior to the Mandatory Termination
Date. On the Mandatory Termination Date (or on the next business day
thereafter if a holiday) the Trustee will deliver each requesting Unitholder's
pro rata number of whole shares of each of the Securities to the account of
the broker-dealer or bank designated by the Unitholder at Depository Trust
Company. The value of the Unitholder's fractional shares of the Securities
will be paid in cash. Unitholders with less than 1,000 Units, Unitholders with
1,000 or more Units not requesting an In Kind Distribution and Unitholders who
do not elect the Rollover Option will receive a cash distribution from the
sale of the remaining Securities within a reasonable time following the
Mandatory Termination Date. Regardless of the distribution involved, the
Trustee will deduct from the funds of the Trusts any accrued costs, expenses,
advances or indemnities provided by the Trust Agreement, including estimated
compensation of the Trustee, costs of liquidation and any amounts required as
a reserve to provide for payment of any applicable taxes or other governmental
charges. Any sale of Securities upon termination may result in a lower amount
than might otherwise be realized if such sale were not required at such time.
The Trustee will then distribute to each Unitholder his pro rata share of the
balance of the Income and Capital Accounts.
The Sponsor currently intends to, but is not obligated to, offer for sale
units of a subsequent Trust series pursuant to the Rollover Option (see "
Rights of Unitholders--Special Redemption and Rollover in New Trust" ).
There is, however, no assurance that units of any new trust will be offered
for sale at that time, or if offered, that there will be sufficient units
available for sale to meet the requests of any or all Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a final
distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and the
Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder.
The Trustee shall not be liable for depreciation or loss incurred by reason of
the sale by the Trustee of any of the Securities. In the event of the failure
of the Sponsor to act under the Trust Agreement, the Trustee may act
thereunder and shall not be liable for any action taken by it in good faith
under the Trust Agreement. The Trustee shall not be liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or
upon the interest thereon or upon it as Trustee under the Trust Agreement or
upon or in respect of a Trust which the Trustee may be required to pay under
any present or future law of the United States of America or of any other
taxing authority having jurisdiction. In addition, the Trust Agreement
contains other customary provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. This provision shall
not protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. VK/AC Holding, Inc. is a wholly owned
subsidiary of MSAM Holdings II, Inc., which in turn is a wholly owned
subsidiary of Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD" ).
MSDWD is a global financial services firm with a market capitalization of more
than $21 billion which was created by the merger of Morgan Stanley Group Inc.
with and into Dean Witter, Discover & Co. on May 31, 1997. MSDWD, together
with various of its directly and indirectly owned subsidiaries, is engaged in
a wide range of financial services through three primary businesses:
securities, asset management and credit services. These principal businesses
include securities underwriting, distribution and trading; merger,
acquisition, restructuring and other corporate finance advisory activities;
merchant banking; stock brokerage and research services; asset management;
trading of futures, options, foreign exchange commodities and swaps (involving
foreign exchange, commodities, indices and interest rates); real estate
advice, financing and investing; global custody, securities clearance services
and securities lending; and credit card services. As of June 2, 1997, MSDWD,
together with its affiliated investment advisory companies, had approximately
$270 billion of assets under management, supervision or fiduciary advice.
Van Kampen American Capital Distributors, Inc. specializes in the underwriting
and distribution of unit investment trusts and mutual funds with roots in
money management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas 77056, (713) 993-0500. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco and Seattle. As of November 30, 1996, the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Trusts or to any other Series thereof. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
As of September 30, 1997, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $65.3 billion of investment
products, of which over $10.85 billion is invested in municipal securities.
The Sponsor and its Van Kampen American Capital affiliates managed $54 billion
of assets, consisting of $34.3 billion for 55 open-end mutual funds (of which
45 are distributed by Van Kampen American Capital Distributors, Inc.) $14.2
billion for 37 closed-end funds and $5.5 billion for 106 institutional
accounts. The Sponsor has also deposited approximately $26 billion of unit
investment trusts. All of Van Kampen American Capital's open-end funds,
closed-ended funds and unit investment trusts are professionally distributed
by leading financial firms nationwide. Based on cumulative assets deposited,
the Sponsor believes that it is the largest sponsor of insured municipal unit
investment trusts, primarily through the success of its Insured Municipals
Income Trust(R)or the IM-IT(R)trust. The Sponsor also provides
surveillance and evaluation services at cost for approximately $13 billion of
unit investment trust assets outstanding. Since 1976, the Sponsor has serviced
over two million investor accounts, opened through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its
affairs are taken over by public authorities, then the Trustee may (i) appoint
a successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800)
221-7668. The Bank of New York is subject to supervision and examination by
the Superintendent of Banks of the State of New York and the Board of
Governors of the Federal Reserve System, and its deposits are insured by the
Federal Deposit Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolios.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trusts. Such
records shall include the name and address of, and the number of Units held
by, every Unitholder of the Trusts. Such books and records shall be open to
inspection by any Unitholder at all reasonable times during the usual business
hours. The Trustee shall make such annual or other reports as may from time to
time be required under any applicable state or federal statute, rule or
regulation (see "Rights of Unitholders--Reports Provided" ). The
Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Securities held in each Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
- --------------------------------------------------------------------------
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Winston & Strawn has acted as counsel for the Trustee.
Independent Certified Public Accountants. The statements of condition and the
related securities portfolios at the Initial Date of Deposit included in this
Prospectus have been audited by Grant Thornton LLP, independent certified
public accountants, as set forth in their report in this Prospectus, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen American Capital Equity Opportunity Trust,
Series 87:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen American Capital Equity Opportunity Trust, Series 87
as of January 27, 1998. The statements of condition and portfolios are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of irrevocable letters of credit deposited to
purchase securities by correspondence with the Trustee. An audit also includes
assessing the accounting principles used and significant estimates made by the
Sponsor, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion. In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Van Kampen American Capital
Equity Opportunity Trust, Series 87 as of January 27, 1998, in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
January 27, 1998
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, Series 87
STATEMENTS OF CONDITION
As of January 27, 1998
<CAPTION>
Small-Cap Mid-Cap
INVESTMENT IN SECURITIES Growth Growth
Trust Trust
------------ ----------
<S> <C> <C>
Contracts to purchase Securities <F1>...........$ 147,734$ 147,280
Organizational costs <F2>....................... 38,240 38,240
------------ ----------
Total..........................................$ 185,974$ 185,520
============ ==========
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--...................................
Accrued organizational costs <F2>..............$ 38,240$ 38,240
Deferred sales charge liability <F3>........... 3,358 3,347
Interest of Unitholders-- ......................
Cost to investors <F4>......................... 149,230 148,770
Less: Gross underwriting commission <F4><F5>... 4,854 4,837
------------ ----------
Net interest to Unitholders <F4>............... 144,376 143,933
------------ ----------
Total..........................................$ 185,974$ 185,520
============ ==========
==========
<FN>
<F1>The aggregate value of the Securities listed under each "Portfolio"
herein and their cost to the Trust are the same. The value of the Securities
is determined by Interactive Data Corporation on the bases set forth under
"Public Offering--Offering Price" . The contracts to purchase
Securities are collateralized by letters of credit of $147,734 and $147,280
for the Small-Cap and Mid-Cap Growth Trusts, respectively, which have been
deposited with the Trustee.
<F2>Each Trust will bear all or a portion of its organizational costs, which will
be deferred and amortized over two years. Organizational costs have been
estimated based on a projected Trust size of $20,000,000 for both the
Small-Cap and Mid-Cap Growth Trusts. To the extent the Trust is larger or
smaller, the estimate will vary. Securities will be sold to pay organizational
costs.
<F3>Represents the amount of mandatory distributions from a Trust on the bases set
forth under "Public Offering."
<F4>The aggregate public offering price and the aggregate initial sales charge are
computed on the bases set forth under "Public Offering--General" and
"Public Offering--Sponsor and Other Compensation" and assume all
single transactions involve less than 10,000 Units. For single transactions
involving 10,000 or more Units, the sales charge is reduced (see "Public
Offering--General" ) resulting in an equal reduction in both the Cost to
investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.
<F5>Assumes the maximum sales charge.
</TABLE>
<TABLE>
Small-Cap Growth Trust, Series 1
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 87)
as of the Initial Date of Deposit: January 27, 1998
<CAPTION>
Estimated
Annual Cost of
Number of Market Value Dividends per Securities
Shares Name of Issuer <F1> per Share <F2> Share <F2> to Trust <F2>
- -------------- ----------------------------------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
155 American Disposal Services, Inc. $ 33.125 $ 0.00 $ 5,134.38
223 AmeriCredit Corporation 22.313 0.00 4,975.69
101 Applied Graphics Technologies, Inc. 50.250 0.00 5,075.25
111 Aspect Development, Inc. 45.250 0.00 5,022.75
148 Caribiner International, Inc. 34.313 0.00 5,078.25
142 Cinar Films Inc. 37.250 0.00 5,289.50
152 Computer Learning Centers, Inc. 32.875 0.00 4,997.00
131 Consolidated Graphics, Inc. 39.000 0.00 5,109.00
111 Cooper Companies, Inc. 46.063 0.00 5,112.94
208 DAOU Systems, Inc. 23.750 0.00 4,940.00
200 Dril-Quip, Inc. 25.375 0.00 5,075.00
107 Engineering Animation, Inc. 47.875 0.00 5,122.63
140 ESC Medical Systems Limited 36.625 0.00 5,127.50
180 Fidelity National Financial, Inc. 28.063 0.28 5,051.25
210 Friede Goldman International Inc. 25.063 0.00 5,263.13
133 Information Management Resources, Inc. 39.000 0.00 5,187.00
130 Mail-Well, Inc. 38.875 0.00 5,053.75
139 Mastech Corporation 37.000 0.00 5,143.00
109 Medicis Pharmaceutical Corporation 47.000 0.00 5,123.00
295 Party City Corporation 18.000 0.00 5,310.00
241 Romac International, Inc. 20.188 0.00 4,865.19
79 Sapient Corporation 63.875 0.00 5,046.13
103 Sirrom Capital Corporation 49.063 1.02 5,053.44
140 Stage Stores, Inc. 36.500 0.00 5,110.00
89 Suiza Foods Corporation 56.750 0.00 5,050.75
123 Sunrise Assisted Living, Inc. 41.688 0.00 5,127.56
153 Veritas DGC Inc. 33.688 0.00 5,154.19
126 Visio Corporation 40.000 0.00 5,040.00
104 Whole Foods Market, Inc. 49.000 0.00 5,096.00
4,283 $ 147,734.25
============= ==============
</TABLE>
<TABLE>
Mid-Cap Growth Trust, Series 1
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 87)
as of the Initial Date of Deposit: January 27, 1998
<CAPTION>
Estimated
Annual
Dividends Cost of
Number of Market Value per Share Securities
Shares Name of Issuer <F1> per Share <F2> <F2> to Trust <F2>
- -------------- --------------------------------------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
81 AMBAC Financial Group, Inc. $ 45.438 $ 0.36 $ 3,680.44
152 AccuStaff, Incorporated 24.500 0.00 3,724.00
52 BJ Services Company 58.438 0.00 3,038.75
229 Brinker International, Inc. 16.188 0.00 3,706.94
77 Brylane, Inc. 48.000 0.00 3,696.00
146 Cadence Design Systems, Inc. 24.813 0.00 3,622.63
66 CDW Computer Centers, Inc. 57.375 0.00 3,786.75
64 CIENA Corporation 54.375 0.00 3,480.00
63 CMAC Investment Corporation 60.688 0.12 3,823.31
81 Cognizant Corporation 45.750 0.12 3,705.75
115 Comverse Technology, Inc. 30.688 0.00 3,529.06
110 Dime Bancorp, Inc. 26.750 0.16 2,942.50
58 El Paso Natural Gas Company 63.875 1.53 3,704.75
140 ESC Medical Systems Limited 36.625 0.00 5,127.50
82 Financial Security Assurance Holdings Ltd. 45.250 0.43 3,710.50
76 FINOVA Group, Inc. 48.938 0.56 3,719.25
127 FIRSTPLUS Financial Group, Inc. 29.438 0.00 3,738.56
97 Health Care and Retirement Corporation 38.438 0.00 3,728.44
127 Interstate Bakeries Corporation 35.125 0.28 4,460.88
74 Jacor Communications, Inc. 49.750 0.00 3,681.50
77 Lear Corporation 48.125 0.00 3,705.63
61 Lincare Holdings, Inc. 61.250 0.00 3,736.25
60 Linear Technology Corporation 60.625 0.24 3,637.50
74 McKesson Corporation 50.313 0.50 3,723.13
200 Mylan Laboratories, Inc. 17.938 0.16 3,587.50
83 Network Associates, Inc. 52.188 0.00 4,331.56
76 Old Republic International Corporation 38.875 0.52 2,954.50
98 Peadiatrix Medical Group, Inc. 37.875 0.00 3,711.75
205 Rental Service Corporation 21.313 0.00 4,369.06
109 Ross Stores, Inc. 33.625 0.18 3,665.13
70 Safeskin Corporation 52.813 0.00 3,696.88
89 SCI Systems, Inc. 41.438 0.00 3,687.94
59 Shared Medical Systems Corporation 62.750 0.84 3,702.25
91 Tech Data Corporation 38.500 0.00 3,503.50
111 TJX Companies, Inc. 33.875 0.20 3,760.13
88 Torchmark Corporation 41.563 0.60 3,657.50
153 Total Renal Care Holdings, Inc. 24.000 0.00 3,672.00
78 Universal Health Services, Inc. 46.875 0.00 3,656.25
66 Veritas DGC Inc. 33.688 0.00 2,223.38
76 Wellpoint Health Networks, Inc. 48.563 0.00 3,690.75
3,941 $ 147,280.06
============= ==============
NOTES TO PORTFOLIOS
- --------------------------------------------------------------------------
<FN>
<F1>All of the Securities are represented by "regular way" contracts for
the performance of which an irrevocable letter of credit has been deposited
with the Trustee. At the Initial Date of Deposit, the Sponsor has assigned to
the Trustee all of its right, title and interest in and to such Securities.
Contracts to acquire Securities were entered into on January 26, 1998 and are
expected to settle on January 29, 1998. (see "The Trust" ).
<F2>The market value of each of the Equity Securities is based on the closing sale
price of each listed Security on the applicable exchange, or on the asked
price if not so listed, on the day prior to the Initial Date of Deposit.
Estimated annual dividends are based on the most recently declared dividends.
Other information regarding the Securities, as of the Initial Date of Deposit,
is as follows:
</TABLE>
<TABLE>
<CAPTION>
Aggregate Aggregate Bid
Profit (Loss) To Estimated Price of
Cost To Sponsor Sponsor Annual Dividends Securities
------------------- --------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Small-Cap Growth Trust $ 147,773 $ (39) $ 155 $ 146,840
Mid-Cap Growth Trust $ 147,402 $ (122) $ 533 $ 147,096
</TABLE>
An affiliate of the Sponsor may have participated as issuer, sole underwriter,
managing underwriter or member of an underwriting syndicate in a public
offering of one or more of the stocks in the Trusts. An affiliate of the
Sponsor may serve as a specialist in the stocks in the Trusts on one or more
stock exchanges and may have a long or short position in any of these stocks
or in options on any of these stocks, and may be on the opposite side of
public orders executed on the floor of an exchange where such stocks are
listed. An officer, director or employee of the Sponsor or an affiliate may be
an officer or director of one or more of the issuers of the stocks in the
Trusts. An affiliate of the Sponsor may trade for its own account as an
odd-lot dealer, market maker, block positioner and/or arbitrageur in any
stocks or options relating thereto. The Sponsor, its affiliates, directors,
elected officers and employee benefit programs may have either a long or short
position in any stock or option of the issuers.
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the Fund
or the Sponsor. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any person to whom
it is not lawful to make such offer in such state.
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Title Page
<S> <C>
Summary of Essential Financial Information........... 4
The Trusts........................................... 7
Objectives and Securities Selection.................. 8
Trust Portfolios..................................... 9
Risk Factors......................................... 15
Federal Taxation..................................... 17
Trust Operating Expenses............................. 21
Public Offering...................................... 22
Rights of Unitholders................................ 27
Trust Administration................................. 32
Other Matters........................................ 37
Report of Independent Certified Public Accountants... 37
Statements of Condition ............................. 38
Portfolios........................................... 39
Notes to Portfolios.................................. 42
</TABLE>
This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Fund has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
When Units of the Trusts are no longer available, or for investors who will
reinvest into subsequent series of the Trusts, this Prospectus may be used as
a preliminary prospectus for a future series; in which case investors should
note the following:
Information contained herein is subject to completion or amendment. A
registration statement relating to securities of a future series has been
filed with the Securities and Exchange Commission. These securities may not be
sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. The Prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws
of any such State.
PROSPECTUS
January 27, 1998
Van Kampen American Capital Equity Opportunity Trust, Series 87
Small-Cap Growth Trust, Series 1
Mid-Cap Growth Trust, Series 1
A Wealth of Knowledge A Knowledge of Wealth
VAN KAMPEN AMERICAN CAPITAL
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
Please retain this Prospectus for future reference.
This Amendment of Registration Statement comprises the following
papers and documents:
The Facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The Consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
1.1.1 Standard Terms and Conditions of Trust
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of counsel as to the Federal Income tax status of
securities being registered.
3.3 Opinion and consent of counsel as to New York tax status of
securities being registered.
4.1 Consent of Interactive Data Corporation.
4.2 Consent of Independent Certified Public Accountants.
7.1 Power of Attorney
EX-27 Financial Data Schedule.
Signatures
The Registrant, Van Kampen American Capital Equity Opportunity
Trust, Series 87, hereby identifies Van Kampen Merritt Equity Opportunity
Trust, Series 1, Series 2, Series 4 and Series 7 and Van Kampen American
Capital Equity Opportunity Trust, Series 13, Series 14 and Series 57 for
purposes of the representations required by Rule 487 and represents the
following: (1) that the portfolio securities deposited in the series as
to the securities of which this Registration Statement is being filed do
not differ materially in type or quality from those deposited in such
previous series; (2) that, except to the extent necessary to identify the
specific portfolio securities deposited in, and to provide essential
financial information for, the series with respect to the securities of
which this Registration Statement is being filed, this Registration
Statement does not contain disclosures that differ in any material
respect from those contained in the registration statements for such
previous series as to which the effective date was determined by the
Commission or the staff; and (3) that it has complied with Rule 460 under
the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series
87 has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Chicago and State of Illinois on the 27th day of January
1998.
Van Kampen American Capital Equity
Opportunity Trust, Series 87
By Van Kampen American Capital
Distributors, Inc.
By Gina M. Costello
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on January
27, 1998 by the following persons who constitute a majority of the Board
of Directors of Van Kampen American Capital Distributors, Inc.
Signature Title
Don G. Powell Chairman and Chief Executive )
Officer )
John H. Zimmerman President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
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
American Capital Equity Opportunity Trust, Series 64 (File No. 333-33087)
and the same are hereby incorporated herein by this reference.
Exhibit 1.1
Van Kampen American Capital Equity Opportunity Trust
Series 87
Trust Agreement
Dated: January 27, 1998
This Trust Agreement among Van Kampen American Capital Distributors,
Inc., as Depositor, American Portfolio Evaluation Services, a division of
Van Kampen American Capital Investment Advisory Corp., as Evaluator, Van
Kampen Capital Investment Advisory Corp., as Supervisory Servicer, and
The Bank of New York, as Trustee, sets forth certain provisions in full
and incorporates other provisions by reference to the document entitled
"Van Kampen American Capital Equity Opportunity Trust, Series 87 and
Subsequent Series, Standard Terms and Conditions of Trust, Effective
January 27, 1998" (herein called the "Standard Terms and Conditions of
Trust") and such provisions as are set forth in full and such provisions
as are incorporated by reference constitute a single instrument. All
references herein to Articles and Sections are to Articles and Sections
of the Standard Terms and Conditions of Trust.
Witnesseth That:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee
agree as follows:
Part I
Standard Terms and Conditions of Trust
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Part II
Special Terms and Conditions of Trust
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(24), listed in the
Schedule hereto, have been deposited in trust under this Trust
Agreement.
2. The fractional undivided interest in and ownership of each
Trust represented by each Unit is the amount set forth under
"Summary of Essential Financial Information - Fractional Undivided
Interest in the Trust per Unit" in the Prospectus. Such fractional
undivided interest may be (a) increased by the number of any
additional Units issued pursuant to Section 2.03, (b) increased or
decreased in connection with an adjustment to the number of Units
pursuant to Section 2.03, or (c) decreased by the number of Units
redeemed pursuant to Section 5.02.
3. The terms "Capital Account Record Date" and "Income Account
Record Date" shall mean the "Income and Capital Account Record Dates" set
forth under "Summary of Essential Financial Information" in the
Prospectus.
4. The terms "Capital Account Distribution Date" and "Income
Account Distribution Date" shall mean the "Income and Capital Account
Distribution Dates" set forth under "Summary of Essential Financial
Information" in the Prospectus.
5. The term "Mandatory Termination Date" shall mean the "Mandatory
Termination Date" set forth under "Summary of Essential Financial
Information" in the Prospectus.
6. The term "Rollover Notification Date" shall mean each of the
"Rollover Notification Dates" set forth under "Summary of Essential
Financial Information" in the Prospectus.
7. The term "Special Redemption Date" shall mean each of the
"Special Redemption Dates" set forth under "Summary of Essential
Financial Information" in the Prospectus.
In Witness Whereof, Van Kampen American Capital Distributors, Inc.
has caused this Trust Agreement to be executed by one of its Vice
Presidents or Assistant Vice Presidents and its corporate seal to be
hereto affixed and attested by its Secretary or one of its Vice
Presidents or Assistant Secretaries, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., and Van Kampen American Capital Investment Advisory Corp., have
each caused this Trust Indenture and Agreement to be executed by their
respective President or one of their respective Vice Presidents and the
corporate seal of each to be hereto affixed and attested to by the
Secretary, Assistant Secretary or one of their respective Vice Presidents
or Assistant Vice Presidents and The Bank of New York, has caused this
Trust Agreement to be executed by one of its Vice Presidents and its
corporate seal to be hereto affixed and attested to by one of its
Assistant Treasurers all as of the day, month and year first above
written.
Van Kampen American Capital
Distributors, Inc.
By James J. Boyne
Vice President, Associate General
Counsel and Assistant Secretary
Attest:
By Cathy Napoli
Assistant Secretary
American Portfolio Evaluation
Services, a division of Van Kampen
American Capital Investment
Advisory Corp.
By Dennis J. McDonnell
President
Attest
By James J. Boyne
Assistant Secretary
Van Kampen American Capital
Investment Advisory Corp.
By Dennis J. McDonnell
President
Attest
By James J. Boyne
Assistant Secretary
The Bank of New York
By Ted Rudich
Vice President
Attest
By Jeffrey Cohen
Assistant Treasurer
Schedule A to Trust Agreement
Securities Initially Deposited
in
Van Kampen American Capital Equity Opportunity Trust, Series 87
(Note: Incorporated herein and made a part hereof is each "Portfolio" as
set forth in the Prospectus.)
Exhibit 1.1.1
Standard Terms and Conditions of Trust
For
Van Kampen American Capital Equity Opportunity Trust
Series 87 and Subsequent Series
Effective: January 27, 1998
Among
Van Kampen American Capital Distributors, Inc.
Depositor
and
The Bank of New York
Trustee
and
American Portfolio Evaluation Services
(A division of Van Kampen American Capital
Investment Advisory Corp.)
Evaluator
and
Van Kampen American Capital Investment Advisory Corp.
Supervisory Servicer
Table of Contents
Page
Preambles 3
Certificate of Ownership 4
Article I Definitions 7
Section 1.01.Definitions 7
Article II Deposit of Securities; Acceptance of Trust; Form
and Issuance of Certificates; Separate Trusts 10
Section 2.01.Deposit of Securities 10
Section 2.02.Acceptance of Trust 12
Section 2.03.Issuance of Units 12
Section 2.04.Form of Certificates 13
Section 2.05.Separate Trusts 13
Article III Administration of Fund 14
Section 3.01.Initial Costs 14
Section 3.02.Income Account 14
Section 3.03.Capital Account 15
Section 3.04.Reserve Account 15
Section 3.05.Deductions and Distributions 15
Section 3.06.Distribution Statements 17
Section 3.07.Sale of Securities 19
Section 3.08.Counsel 20
Section 3.09.Trustee not Required to Amortize 20
Section 3.10.Liability of Depositor 20
Section 3.11.Notice to Depositor 21
Section 3.12.Replacement Securities 21
Section 3.13.Supervisory Servicer 23
Section 3.14.Abatement of Compensation of the Trustee,
Evaluator and Supervisory Servicer in an Equity
and Treasury Trust 23
Section 3.15.Deferred Sales Charge 24
Section 3.16.Reclaiming Foreign Taxes 24
Section 3.17.Foreign Currency Exchange 24
Article IV Evaluation of Securities; Evaluator 25
Section 4.01.Evaluation by Evaluator 25
Section 4.02.Information for Unitholders 26
Section 4.03.Compensation of Evaluator 26
Section 4.04.Liability of Evaluator 26
Section 4.05.Resignation and Removal of Evaluator; Successor 27
Article V Evaluation, Redemption, Purchase, Transfer,
Interchange or Replacement of Units 28
Section 5.01.Trust Evaluation 28
Section 5.02.Redemptions by Trustee; Purchases by Depositor 29
Section 5.03.Transfer or Interchange of Units 32
Section 5.04.Certificates Mutilated, Destroyed, Stolen or
Lost 33
Section 5.05.Rollover of Units 33
Article VI Trustee 35
Section 6.01.General Definition of Trustee's Liabilities,
Rights and Duties 35
Section 6.02.Books, Records and Reports 42
Section 6.03.Indenture and List of Securities on File 42
Section 6.04.Compensation 42
Section 6.05.Removal and Resignation of Trustee; Successor 43
Section 6.06.Qualifications of Trustee 45
Article VII Rights of Unitholders 45
Section 7.01.Beneficiaries of Trust 45
Section 7.02.Rights, Terms and Conditions 45
Article VIII Additional Covenants; Miscellaneous Provisions 46
Section 8.01.Amendments 46
Section 8.02.Termination 47
Section 8.03.Construction 49
Section 8.04.Registration of Units 49
Section 8.05.Written Notice 49
Section 8.06.Severability 50
Section 8.07.Dissolution of Depositor Not to Terminate 50
Standard Terms and Conditions of Trust
for
Van Kampen American Capital Equity Opportunity Trust
Series 87 and Subsequent Series
Effective: January 27, 1998
These Standard Terms and Conditions of Trust effective January 27,
1998 are executed by Van Kampen American Capital Distributors, Inc., as
Depositor, The Bank of New York, as Trustee, American Portfolio
Evaluation Services (a division of Van Kampen American Capital Investment
Advisory Corp.), as Evaluator, and Van Kampen American Capital Investment
Advisory Corp., as Supervisory Servicer.Preambles
Witnesseth that:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, the Trustee, the Evaluator and the Supervisory
Servicer agree as follows:
Introduction
These Standard Terms and Conditions of Trust, effective January 27,
1998, shall be applicable to Van Kampen American Capital Equity
Opportunity Trust, Series 87 and all subsequent Series established after
the date of effectiveness hereof, as provided in this paragraph. For Van
Kampen American Capital Equity Opportunity Trust, Series 87 and all
subsequent Series established after the date of effectiveness hereof to
which these Standard Terms and Conditions of Trust effective January 27,
1998 are to be applicable, the Depositor, the Trustee, the Evaluator and
the Supervisory Servicer shall execute a Trust Agreement incorporating by
reference these Standard Terms and Conditions of Trust effective January
27, 1998 and designating any exclusions from or additions or exceptions
to such incorporation by reference for the purposes of that Series or
variation of the terms hereof for the purposes of that Series.
Whereas, the form of the Certificates in the respective Trusts shall
be substantially as follows:
Certificate of Ownership
Evidencing an Undivided
Interest in
This Is to Certify that
is the owner and registered
holder of this Certificate evidencing
the ownership of
of fractional undivided interest in the above-named Trust created
pursuant to the Indenture, a copy of which is available at the office of
the Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the Holder of
this Certificate by virtue of the acceptance hereof assents and is bound,
a summary of which Indenture is contained in the prospectus related to
the Trust. This Certificate is transferable and interchangeable by the
registered owner in person or by his duly authorized attorney at the
Trustee's office upon surrender of this Certificate properly endorsed or
accompanied by a written instrument of transfer and any other documents
that the Trustee may require for transfer, in form satisfactory to the
Trustee, and payment of the fees and expenses provided in the Indenture.
Witness the facsimile signature of the Depositor and the manual
signature of an authorized signatory of the Trustee.
Dated:
Van Kampen American Capital The Bank of New York
Distributors, Inc. Trustee
Depositor
By____________________________ By
Chairman Authorized Signatory
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT -
_____Custodian_____
TEN ENT -as tenants by the entireties (Cust)
(Minor)
JT TEN -as joint tenants with right Under Uniform Gifts to
of survivorship and not Minors Act
as tenants in common
______________________________
State
Additional abbreviations may also be used though not in the above
list.
(Form of Assignment)
For Value Received,
hereby sell, assign and transfer _________ Units represented by this
Certificate unto
Social Security or Other Identifying
Number of Assignee Must Be Provided
and does hereby irrevocably constitute and appoint
, attorney,
to transfer said Units on the books of the Trustee, with full power and
substitution in the premises.
Dated:
Notice: The signature to this assignm
ent must correspond with the name
as written upon the face of the
Certificate in every particular,
without alteration or enlargement
or any change whatever.
Signature(S) Guaranteed By
Firm or Bank
Authorized Signature
Signatures must be guaranteed by a
participant in the Securities Transfer
Agents Medallion Program ("STAMP") or in
such other signature guarantee program
as is acceptable to the Trustee.
Now, Therefore, in consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee, the Evaluator
and the Supervisory Servicer agree as follows:
Article I Definitions
Section 1.01. Definitions. Whenever used in this Indenture the
following words and phrases, unless the context clearly indicates
otherwise, shall have the following meanings:
(1) "Depositor" shall mean Van Kampen American Capital
Distributors, Inc. and its successors in interest, or any successor
depositor appointed as hereinafter provided.
(2) "Trustee" shall mean The Bank of New York, or any
successor trustee appointed as hereinafter provided.
(3) "Evaluator" shall mean American Portfolio Evaluation
Services (a division of a Van Kampen American Capital Investment
Advisory Corp.) and its successors in interest, or any successor
evaluator appointed as hereinafter provided.
(4) "Supervisory Servicer" shall mean Van Kampen American
Capital Investment Advisory Corp. and its successors in interest, or
any successor portfolio supervisor appointed as hereinafter
provided.
(5) "Business Day" shall mean any day on which the New York
Stock Exchange is open except as stated in the following sentences.
With respect to a Trust which holds Securities principally traded on
foreign securities exchanges in two or more countries, "Business
Day" shall mean any day on which the New York Stock Exchange is open
other than any day on which Securities representing greater than
thirty-three percent (33%) of the aggregate value (determined as
described in Section 4.01) of the Trust are not traded on the
principal trading exchange for such Securities due to a customary
business holiday on such exchange. With respect to a Trust which
holds Securities principally traded on a foreign securities
exchange(s) in a single country, "Business Day" shall mean any day
on which the New York Stock Exchange is open other than any day on
which such foreign securities exchange is closed due to a customary
business holiday on such exchange(s).
(6) "Capital Account Distribution Date" shall have the meaning
assigned to it in the Trust Agreement.
(7) "Capital Account Record Date" shall have the meaning
assigned to it in the Trust Agreement.
(8) "Certificate" shall mean any one of the certificates
executed by the Trustee and the Depositor evidencing ownership of an
undivided fractional interest in a Trust.
(9) "Contract Securities" shall mean Securities which are to
be acquired by the Fund pursuant to purchase contracts which have
been assigned to the Trustee.
(10) "Distribution Agent" shall mean the Trustee acting in its
capacity as distribution agent pursuant to Section 5.05 herein.
(11) "Equity Securities" shall mean any equity securities of
corporations or other entities deposited in a Trust.
(12) "Equity Trust" shall mean each Trust which is comprised
entirely of Equity Securities.
(13) "Equity and Treasury Trust" shall mean each Trust which is
comprised of both Equity Securities and Zero Coupon Obligations.
(14) "Fund" shall mean the collective Trusts created by the
Trust Agreement, which shall consist of Securities held pursuant and
subject to the Indenture, together with all undistributed income or
other amounts received or accrued thereon, any undistributed cash
held in the Income and Capital Accounts or otherwise realized from
the sale, redemption, liquidation or maturity thereof. Such amounts
as may be on deposit in the Reserve Account as hereinafter
established shall be excluded from the Fund.
(15) "Income Account Distribution Date" shall have the meaning
assigned to it in the Trust Agreement.
(16) "Income Account Record Date" shall have the meaning
assigned to it in the Trust Agreement.
(17) "Indenture" shall mean these Standard Terms and Conditions
of Trust as originally executed or, if amended as hereinafter
provided, as so amended, together with the Trust Agreement creating
a particular series of the Fund.
(18) "Initial Date of Deposit" shall mean the date of the
initial Trust Agreement applicable to a Trust.
(19) "Letter of Credit" shall mean the letter of credit or
letters of credit provided to the Trustee by a financial institution
for the purchase of any Contract Securities deposited in the Fund.
(20) "Mandatory Termination Date" shall be the date so
specified in the Trust Agreement.
(21) "Percentage Ratio" shall mean, for each Trust which will
issue additional Units pursuant to Section 2.03 hereof, (a) the
percentage relationship among the Equity Securities based on the
number of shares of each Equity Security per Unit existing
immediately prior to such additional deposit with respect to an
Equity Trust and (b) the percentage relationship existing
immediately prior to the related additional deposit of Securities
among the maturity value per Unit of the Zero Coupon Obligations,
each Equity Security per Unit as a percent of all shares of Equity
Securities and the sum of the maturity value per Unit of the Zero
Coupon Obligations and all Equity Securities attributable to each
Unit with respect to an Equity and Treasury Trust. The Percentage
Ratio shall be adjusted to the extent necessary, and may be rounded,
to reflect the occurrence of a stock dividend, a stock split or a
similar event which affects the capital structure of the issuer of
an Equity Security.
(22) "Prospectus" shall mean (a) the prospectus relating to the
Trust filed with the Securities and Exchange Commission pursuant to
Rule 497(b) under the Securities Act of 1933, as amended, and dated
the date of the Trust Agreement or (b) if any post effective
amendment to such prospectus shall have been subsequently made
effective under the Securities Act of 1933, as amended, such post
effective amendment thereto.
(23) "Rollover Notification Date" shall have the meaning
assigned to it in the Trust Agreement.
(24) "Securities" shall mean (a) Zero Coupon Obligations and
Equity Securities deposited in an Equity and Treasury Trust and
shall mean the Equity Securities deposited in an Equity Trust, which
Securities are listed in the various Schedules to the Trust
Agreement or are deposited in a Trust pursuant to Section 2.01(b)
hereof, (b) Replacement Securities acquired pursuant to Section 3.12
hereof, as may from time to time to be construed to be held as part
of a Trust and (c) distributions of the same securities.
(25) "Special Redemption Date" shall have the meaning assigned
to it in the Trust Agreement.
(26) "Supplemental Indenture" shall mean an amendment or
supplement to the Indenture pursuant to Section 2.01(b) for the
purpose of depositing additional Securities in a Trust and issuing
additional Units.
(27) "Trust" or "Trusts" shall mean the separate trust or
trusts created by this Indenture, the Securities constituting the
portfolios of which are listed in the various separate Schedules
attached to the related Trust Agreement.
(28) "Trust Agreement" shall mean the Trust Agreement for the
particular series of the Fund into which these Standard Terms and
Conditions are incorporated.
(29) "Unit" in respect of any Trust shall mean the fractional
undivided interest in and ownership of the Trust which shall be
initially equal to the fraction specified in the Trust Agreement,
the numerator of which is one and the denominator of which fraction
shall be (1) increased by the number of any additional Units issued
pursuant to Section 2.03 hereof, (2) increased or decreased in
connection with an adjustment to the number of Units pursuant to
Section 2.03 and (3) decreased by the number of any Units redeemed
as provided in Section 5.02 hereof. Whenever reference is made
herein to the "interest" of a Unitholder in the Trust or in the
Income and Capital Accounts, it shall mean such fractional undivided
interest represented by the number of Units held of record by such
Unitholder.
(30) "Unitholder" shall mean the registered holder of any Unit,
whether or not in certificated form, as recorded on the registration
books of the Trustee.
(31) "Zero Coupon Obligations" shall mean any zero coupon
bonds, i.e., obligations which accrue but do not pay income
currently, are sold at a discount from principal value and represent
an obligation to receive the principal value thereof at a future
date, issued by the U.S. government, which are deposited in an
Equity and Treasury Trust. Only Zero Coupon Obligations which, if
certificated, are or may be registered and held by the Trustee in
book entry form on the registration books of a bank, governmental
entity or clearing house which it is authorized to use as custodian
of assets of a unit investment trust pursuant to the Investment
Company Act of 1940 shall be eligible for deposit in any Equity and
Treasury Trust.
(32) Words importing singular number shall include the plural
number in each case and vice versa, and words importing persons
shall include corporations and associations, as well as natural
persons.
(33) The words "herein," "hereby," "herewith," "hereof,"
"hereinafter," "hereunder," "hereinabove," "hereafter," "heretofore"
and similar words or phrases of reference and association shall
refer to this Indenture in its entirety.
'Article II Deposit of Securities Acceptance of Trust; Form and
Issuance of Certificates; Separate Trusts';Article II
Deposit of Securities; Acceptance of Trust;
Form and Issuance of Certificates;
Separate Trusts
Section 2.01. Deposit of Securities. (a) The Depositor, on the date of
the Trust Agreement, has deposited with the Trustee in trust the
Securities listed in the Schedules to the Trust Agreement in bearer form
or duly endorsed in blank or accompanied by all necessary instruments of
assignment and transfer in proper form or Contract Securities relating to
such Securities to be held, managed and applied by the Trustee as herein
provided. The Depositor shall deliver the Securities listed on said
Schedules which were not actually delivered concurrently with the
execution and delivery of the Trust Agreement and which were represented
by Contract Securities to the Trustee within 10 calendar days after said
execution and delivery (the "Delivery Period"). If a contract to buy
such Securities between the Depositor and seller is terminated by the
seller thereof for any reason beyond the control of the Depositor or if
for any other reason the Securities are not delivered to the Trust by the
end of the Delivery Period, the Trustee shall immediately draw on the
Letter of Credit, if any, in its entirety, apply the moneys in accordance
with Section 2.01(d), and the Depositor shall forthwith take the remedial
action specified in Section 3.12. If the Depositor does not take the
action specified in Section 3.12 within 10 calendar days of the end of
the Delivery Period, the Trustee shall forthwith take the action
specified in Section 3.12.
(b) From time to time following the Initial Date of Deposit, the
Depositor is hereby authorized, in its discretion, to assign, convey to
and deposit with the Trustee (i) additional Securities, duly endorsed in
blank or accompanied by all necessary instruments of assignment and
transfer in proper form (or purchase contracts relating to Contract
Securities), and/or (ii) cash (or a Letter of Credit in lieu of cash)
with instructions to purchase additional Securities, in an amount equal
to the portion of the Unit Value of the Units created by such deposit
attributable to the Securities to be purchased pursuant to such
instructions. Such deposit of additional Securities or cash with
instructions to purchase additional Securities shall be made, in each
case, pursuant to a Supplemental Indenture accompanied by a legal opinion
issued by legal counsel satisfactory to the Depositor. Instructions to
purchase additional Securities shall be in writing, and shall specify the
name of the Security, CUSIP number, if any, aggregate amount, price or
price range and date to be purchased. When requested by the Trustee, the
Depositor shall act as broker or agent to execute purchases in accordance
with such instructions; the Depositor shall be entitled to compensation
therefor in accordance with applicable law and regulations. The Trustee
shall have no liability for any loss or depreciation resulting from any
purchase made pursuant to the Depositor's instructions or made by the
Depositor as broker, except by reason of its own negligence, lack of good
faith or willful misconduct.
In connection with any deposit pursuant to this Section 2.01(b) in
an Equity and Treasury Trust, the Depositor shall be obligated to
determine that the maturity value of the Zero Coupon Obligations included
in the deposit, divided by the number of Units created by reason of the
deposit, shall equal at least $11.00.
The Depositor, in each case, shall ensure that each deposit of
additional Securities pursuant to this Section shall be, as nearly as is
practicable, in the identical ratio as the Percentage Ratio for such
Securities as is specified in the Trust Agreement for each Trust. The
Depositor shall deliver the additional Securities which were not
delivered concurrently with the deposit of additional Securities and
which were represented by Contract Securities within 10 calendar days
after such deposit of additional Securities (the "Additional Securities
Delivery Period"). If a contract to buy such Securities between the
Depositor and seller is terminated by the seller thereof for any reason
beyond the control of the Depositor or if for any other reason the
Securities are not delivered to the Trust by the end of the Additional
Securities Delivery Period for such deposit, the Trustee shall
immediately draw on the Letter of Credit, if any, in its entirety, apply
the moneys in accordance with Section 2.01(d), and the Depositor shall
forthwith take the remedial action specified in Section 3.12. If the
Depositor does not take the action specified in Section 3.12 within 10
calendar days of the end of the Additional Securities Delivery Period,
the Trustee shall forthwith take the action specified in Section 3.12.
(c) In connection with the deposits described in Section 2.01 (a)
and (b), the Depositor has, in the case of Section 2.01(a) deposits, and,
prior to the Trustee accepting a Section 2.01(b) deposit, will, deposit
cash and/or Letter(s) of Credit in an amount sufficient to purchase the
Contract Securities relating to Securities which are not actually
delivered to the Trustee at the time of such deposit. The terms of any
Letter of Credit must unconditionally allow the Trustee to draw on the
full amount of the available Letter of Credit. The Trustee may deposit
such cash or cash drawn on the Letter of Credit in a non-interest bearing
account for the Fund. If any Contract Security requires settlement in a
foreign currency, in connection with the deposit of such Contract
Security the Depositor will deposit with the Trustee either an amount of
such currency sufficient to settle the contract or a foreign exchange
contract in such amount which settles concurrently with the settlement of
the Contract Security and cash or a Letter of Credit in U.S. dollars
sufficient to perform such foreign exchange contract.
(d) In the event that the purchase of Contract Securities pursuant
to any contract shall not be consummated in accordance with said contract
or if the Securities represented by Contract Securities are not delivered
to the Fund in accordance with Section 2.01(a) or 2.01(b) and the moneys,
or, if applicable, the moneys drawn on the Letter of Credit, deposited by
the Depositor are not utilized for Section 3.12 purchases of Replacement
Securities, such funds, to the extent of the purchase price of Failed
Contract Securities for which no Replacement Security were acquired
pursuant to Section 3.12, plus all amounts described in the next
succeeding sentence, shall be credited to the Capital Account and
distributed pursuant to Section 3.05 to Unitholders of record as of the
Income Account Record Date next following the failure of consummation of
such purchase. The Depositor shall cause to be refunded to each
Unitholder his pro rata portion of the sales charge levied on the sale of
Units to such Unitholder attributable to such Failed Contract Security.
Any amounts remaining from moneys drawn on the Letter of Credit which are
not used to purchase Replacement Securities or are not used to provide
refunds to Unitholders shall be paid to the Depositor.
(e) The Trustee is hereby irrevocably authorized to effect
registration or transfer of the Securities in fully registered form to
the name of the Trustee or to the name of its nominee or to hold the
Securities in a clearing agency registered with the Securities and
Exchange Commission or in a book entry system operated by the Federal
Reserve Board.
Section 2.02. Acceptance of Trust. The Trustee hereby declares it
holds and will hold each Trust as Trustee in trust upon the trusts herein
created for the use and benefit of the Unitholders, subject to the terms
and conditions of this Indenture.
Section 2.03. Issuance of Units. (a) The Trustee hereby acknowledges
receipt of the deposit of the Securities listed in the Schedules to the
Trust Agreement and referred to in Section 2.01 hereof and,
simultaneously with the receipt of said deposit, has recorded on its
books the ownership, by the Depositor or such other person or persons as
may be indicated by the Depositor, of the aggregate number of Units
specified in the Prospectus and has delivered, or on the order of the
Depositor will deliver, in exchange for such Securities, documentation
evidencing the ownership of the number of Units specified and, if such
Units are represented by a Certificate, such Certificate substantially in
the form above recited, representing the ownership of those Units. The
number of Units may be increased through a split of the Units or
decreased through a reverse split thereof, as directed by the Depositor,
on any day on which the Depositor is the only Unitholder, which revised
number of Units shall be recorded by the Trustee on its books. The
Trustee hereby agrees that on the date of any Supplemental Indenture it
shall acknowledge that the additional Securities identified therein have
been deposited with it by recording on its books the ownership, by the
Depositor or such other person or persons as may be indicated by the
Depositor, of the aggregate number of Units to be issued in respect of
such additional Securities so deposited, and shall, if so requested,
execute a Certificate or Certificates substantially in the form above
recited representing the ownership of an aggregate number of those Units.
(b) Under the terms and conditions of the Indenture and the Trust
Agreement and at such times as are permitted by the Trustee, Units may
also be held in uncertificated form. Units will be held in
uncertificated form unless a Unitholder requests a Certificate
representing his or her Units. The Trustee shall, at the request of the
holder of any Units held in uncertificated form, issue a new Certificate
to evidence such Units and at such time make an appropriate notation in
the registration books of the Trustee. Certificates, if requested, will
be issued in denominations of one Unit, or any whole multiple thereof,
subject to the Trust's minimum investment requirements. Thereafter,
Units may again be held in uncertificated form by surrendering such
Certificate to the Trustee for cancellation. At such time, an
appropriate notation will be made in the registration book of the Trustee
to indicate that the Units formerly evidenced by such canceled
Certificate are Units held in uncertificated form. The rights set forth
in this Indenture of any holder of Units held in uncertificated form or
of Units represented by a Certificate shall be the same of those of any
other Unitholder.
Section 2.04. Form of Certificates. Each Certificate referred to in
Section 2.03 is, and each Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, in fully registered form, transferable only on the books
of the Trustee as herein provided, executed manually by an authorized
officer of the Trustee and in facsimile by the Chairman, President or one
of the Vice Presidents of the Depositor and dated the date of execution
and delivery by the Trustee.
Section 2.05. Separate Trusts. The Trusts created by this Indenture
are separate and distinct trusts for all purposes and the assets of one
Trust may not be commingled with the assets of any other nor shall the
expenses of any Trust be charged against the other. Units representing
the ownership of an undivided fractional interest in one Trust shall not
be exchangeable for Units representing the ownership of an undivided
fractional interest in any other.
Article III Administration of FundArticle III
Administration of Fund
Section 3.01. Initial Costs. To the extent not borne by the Depositor,
the expenses incurred in establishing a Trust shall be borne by such
Trust, including the cost of the initial preparation and typesetting of
the registration statement, prospectuses (including preliminary
prospectuses), the Indenture, and other documents relating to a Trust,
printing of Certificates, Securities and Exchange Commission and state
blue sky registration fees, the costs of the initial valuation of the
portfolio and audit of a Trust, the initial fees and expenses of the
Trustee, and legal and other out-of-pocket expenses related thereto, but
not including the expenses incurred in the printing of prospectuses
(including preliminary prospectuses), expenses incurred in the
preparation and printing of brochures and other advertising materials and
any other selling expenses. To the extent the funds in the Income and
Capital Accounts of the Trust shall be insufficient to pay the expenses
borne by the Trust specified in this Section 3.01, the Trustee shall
advance out of its own funds and cause to be deposited and credited to
the Income or Capital Accounts such amount as may be required to permit
payment of such expenses. The Trustee shall be reimbursed for such
advance in the manner provided in the related Prospectus; provided,
however, that nothing herein shall be deemed to prevent, and the Trustee
shall be entitled to, full reimbursement for any advances made pursuant
to this Section no later than the termination of the Trust.
Section 3.02. Income Account. The Trustee shall collect the dividends
or other like cash distributions on the Securities in each Trust as such
becomes payable (including all moneys representing penalties for the
failure to make timely payments on the Securities, or as liquidated
damages for default or breach of any condition or term of the Securities
or of the underlying instrument relating to any Securities and other
income attributable to a Failed Contract Security for which no
Replacement Security has been obtained pursuant to Section 3.12 hereof)
and credit such income to a separate account for each Trust to be known
as the "Income Account."
Any distributions received by the Trustee in a form other than cash
(other than a non-taxable distribution of the shares of the distributing
corporation) shall, unless the Depositor instructs otherwise, be sold in
the manner directed by the Depositor and the proceeds of sale credited to
the Income Account of the Trust. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any
such sale.
If, as the result of the deposit of Securities subsequent to the
Initial Date of Deposit, distributions with respect to any issue of
Securities are received on some, but not all, Securities of such issue,
the Depositor shall pay to the Trustee for distribution to Unitholders
such amount as will equal the difference between the total of the
distribution on such issue received by the Trust and the amount which
would have been received had distributions been received on all
Securities of such issue. The payment of such amount by the Depositor
shall be made on the fifth business day following such supplemental
deposit, and shall be secured by any cash and/or Letter of Credit
deposited pursuant to Section 2.01(c) hereof.
Section 3.03. Capital Account. All moneys received by the Trustee in
respect of the Securities in each Trust, other than amounts credited to
the Income Account, shall be credited to a separate account for each
Trust to be known as the "Capital Account" (except for moneys deposited
by the Depositor or moneys pursuant to draws on the Letter of Credit for
purchase of Contract Securities pursuant to Section 2.01, which shall be
separately held in trust by the Trustee for such purpose and shall not be
credited to the Capital Account except as provided in Section 2.01(d)).
Section 3.04. Reserve Account. From time to time, the Trustee shall
withdraw from the cash on deposit in the Income Account or the Capital
Account of the appropriate Trust such amounts as it, in its sole
discretion, shall deem requisite to establish a reserve for any
applicable taxes or other governmental charges that may be payable out of
such Trust. Such amounts so withdrawn shall be credited to a separate
account for each Trust which shall be known as the "Reserve Account."
The Trustee shall not be required to distribute to the Unitholders any of
the amounts in the Reserve Account; provided, however, that if it shall,
in its sole discretion, determine that such amounts are no longer
necessary for the payment of any applicable taxes or other governmental
charges, then it shall promptly deposit such amounts in the account from
which withdrawn, or if such Trust shall have terminated or shall be in
the process of termination, the Trustee shall distribute same in
accordance with Section 8.02(d) to each Unitholder such holder's interest
in the Reserve Account.
Section 3.05. Deductions and Distributions. (a) On or immediately
after the twenty-fifth day of each month, the Trustee shall satisfy
itself as to the adequacy of the Reserve Account, making any further
credits thereto as may appear appropriate in accordance with Section 3.04
and shall then with respect to each Trust:
(i) deduct from the Income Account or, to the extent funds are
not available in such Account or the Prospectus provides otherwise,
from the Capital Account and pay to itself individually the amounts
that it is at the time entitled to receive pursuant to Section 6.04;
(ii) deduct from the Income Account or, to the extent funds are
not available in such Account or the Prospectus provides otherwise,
from the Capital Account and pay to, or reserve for, the Evaluator
the amount that it is at the time entitled to receive pursuant to
Section 4.03;
(iii) deduct from the Income Account or, to the extent funds are
not available in such Account or the Prospectus provides otherwise,
from the Capital Account and pay to counsel, as hereinafter provided
for, an amount equal to unpaid fees and expenses, if any, of such
counsel pursuant to Section 3.08, as certified to by the Depositor;
and
(iv) deduct from the Income Account or, to the extent funds are
not available in such Account or the Prospectus provides otherwise,
from the Capital Account and pay to, or reserve for, the Supervisory
Servicer the amount that it is entitled to receive pursuant to
Section 3.13.
(b) (i) On each Income Account Distribution Date, the Trustee shall
distribute to each Unitholder of record at the close of business on the
Record Date an amount per Unit equal to such Unitholder's Income
Distribution (as defined below) computed as of the close of business on
the Income Account Record Date immediately preceding such Income Account
Distribution Date plus, if such Income Account Distribution Date is also
a Capital Account Distribution Date for the distribution of capital, such
Unitholder's pro rata share of the balance of the Capital Account (except
for moneys on deposit therein required to purchase Contract Securities).
The Trust may provide the following distribution elections: (1)
distributions to be made by mail addressed to the post office address of
the Unitholder as it appears on the registration books of the Trustee or
(2) distributions to be made to the designated agent for any reinvestment
program when, as and if available to the Unitholder through the
Depositor. If no election is offered by the Depositor or if no election
is specified by the Unitholder at the time of purchase of any Unit,
distribution of principal and income and capital gains, if any, shall be
distributed as provided in (1) above. Any election other than a deemed
election as described in the preceding sentence shall be by written
notice to, and in form satisfactory to, the Trustee. Once a distribution
election has been chosen by the Unitholder, such election shall remain in
effect until changed by the Unitholder. Such change of election may be
made by notification thereof to the Trustee at any time in form
satisfactory to the Trustee. A transferee of any Unit may make his
distribution election in the manner as set forth above. The Trustee
shall be entitled to receive in writing a notification from the
Unitholder as to his or her change of address.
(ii) For the purposes of this Section 3.05, the Unitholder's
"Income Distribution" shall be equal to such Unitholder's pro rata
share of the cash balance (other than any amortized discount) in the
Income Account computed as of the close of business on the Income
Account Record Date immediately preceding such Income Distribution
after deduction of (1) the fees and expenses then deductible
pursuant to Section 3.05(a) and (2) the Trustee's estimate of other
expenses properly chargeable to the Income Account pursuant to the
Indenture which have accrued, as of such Income Account Record Date
or are otherwise properly attributable to the period to which such
Income Distribution relates.
(iii) The amount to be so distributed to each Unitholder shall
be that pro rata share of the balance of the Income and Capital
Accounts, computed as set forth herein, as shall be represented by
the Units registered in the name of such Unitholder. In the
computation of each such pro rata share, fractions of less than one
cent shall be omitted. After any such distribution provided for
above, any cash balance remaining in the Income Account or the
Capital Account shall be held in the same manner as other amounts
subsequently deposited in each of such accounts, respectively.
(iv) Principal and other income attributable to Contract
Securities which the Depositor shall have declared by written notice
to the Trustee to be Failed Contract Securities for which
Replacement Securities are not to be substituted pursuant to
Section 3.12 hereof shall be distributed to Unitholders of record as
of the close of business on the Income Account Record Date next
following the failure of consummation of such purchase and shall be
distributed not more than 120 days after the receipt of such notice
by the Trustee or at such earlier time in such manner as the Trustee
in its sole discretion deems to be in the best interest of
Unitholders.
(v) For the purpose of distributions as herein provided, the
Unitholders of record on the registration books of the Trustee at
the close of business on each Income Account Record Date shall be
conclusively entitled to such distribution, and no liability shall
attach to the Trustee by reason of payment to any Unitholder of
record. Nothing herein shall be construed to prevent the payment of
amounts from the Income Account and the Capital Account to
individual Unitholders by means of one check, draft or other
instrument or device provided that the appropriate statement of such
distribution shall be furnished therewith as provided in
Section 3.06 hereof.
Section 3.06. Distribution Statements. With each distribution from the
Income or Capital Accounts of a Trust, the Trustee shall set forth,
either in the instrument by means of which payment of such distribution
is made or in an accompanying statement, the amount being distributed
from each such account, expressed as a dollar amount per Unit of such
Trust. The Trustee shall also furnish each Unitholder with a change of
address form as part of each statement.
Within a reasonable period of time after the last business day of
each calendar year, the Trustee shall furnish to each person who at any
time during such calendar year was a Unitholder of a Trust a statement
setting forth, with respect to such calendar year and with respect to
such Trust:
(A) as to the Income Account:
(1) the amount of income received or, in the case of the
Zero Coupon Obligations, accrued on the Securities (including
amounts received as a portion of the proceeds of any
disposition of Securities);
(2) the amounts paid from the Income Account for
purchases of Securities pursuant to Section 3.12 and for
redemptions pursuant to Section 5.02;
(3) the deductions from the Income Account for payment
into the Reserve Account;
(4) the deductions for applicable taxes and fees and
expenses of the Trustee, the Evaluator, the Supervisory
Servicer, counsel, auditors and any expenses paid by the Trust
pursuant to Section 3.05; and
(5) the amounts reserved for purchases of Contract
Securities or for purchases made pursuant to Section 3.12; and
(6) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a
dollar amount per Unit outstanding on the last Business Day of
such calendar year;
(B) as to the Capital Account;
(1) the date of principal payments and prepayments
due to sale, maturity, redemption, liquidation or
disposition of any of the Securities and the net proceeds
received therefrom, excluding any portion thereof credited
to the Income Account;
(2) the deductions from the Capital Account, if any,
for payment of applicable taxes and fees and expenses of
the Trustee, the Evaluator, the Supervisory Servicer,
counsel, auditors and any expenses paid by the Trust under
Section 3.05;
(3) the amount paid for purchases of Securities pursuant
to Section 3.12 and for redemptions pursuant to Section 5.02;
(4) the deductions from the Capital Account for payments
into the Reserve Account;
(5) the amounts reserved for purchases of Contract
Securities or for purchases made pursuant to Section 3.12;
(6) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a
dollar amount per Unit outstanding on the last Business Day of
such calendar year;and
(C) the following information:
(1) a list of Securities as of the last Business Day of
such calendar year (grouped in the case of fixed income
obligations by coupon and maturity range in the case of the
Zero Coupon Obligations) and a list which identifies all
Securities sold or other Securities acquired during such
calendar year, if any;
(2) the number of Units outstanding on the last Business
Day of such calendar year;
(3) the Unit Value as defined in Section 5.01 based on
the last Trust Evaluation pursuant to Section 5.01 made during
such calendar year; and
(4) the amounts actually distributed or which are
otherwise attributable to Unitholders during such calendar year
from the Income and Capital Accounts, separately stated,
expressed as total dollar amounts for such distributions and
the status of such distributions for federal income tax
purposes.
Section 3.07. Sale of Securities. (a) If necessary, in order to
maintain the sound investment character of a Trust, the Depositor may
direct the Trustee to sell or liquidate Securities in such Trust at such
price and time and in such manner as shall be determined by the
Depositor, provided that the Supervisory Servicer has determined, if
appropriate, that any one or more of the following conditions exist (but
in the case of Zero Coupon Obligations only upon the occurrence of events
described in (vi) and (vii) below):
(i) that there has been a default on any of the Securities in
the payment of dividends, after declared and when due and payable;
(ii) that any action or proceeding has been instituted at law
or equity seeking to restrain or enjoin the payment of dividends on
any such Equity Securities, or that there exists any legal question
or impediment affecting such Equity Securities or the payment of
dividends from the same;
(iii) that there has occurred any breach of covenant or warranty
in any document relating to the issuer of the Equity Securities
which would adversely affect either immediately or contingently the
payment of dividends from the Equity Securities, or the general
credit standing of the issuer or otherwise impair the sound
investment character of such Equity Securities;
(iv) that there has been a default in the payment of dividends,
principal of or income or premium, if any, on any other outstanding
obligations of the issuer of such Securities;
(v) that the price of any such Equity Securities had declined
to such an extent or other such credit factors exist so that in the
opinion of the Depositor, as evidenced in writing to the Trustee,
the retention of such Securities would be detrimental to the Trust
and to the interest of the Unitholders;
(vi) that all of the Securities in the Trust will be sold
pursuant to termination of the Trust pursuant to Section 8.02
hereof;
(vii) that such sale is required due to Units tendered for
redemption;
(viii) if the Trust has not elected to be taxed as a "regulated
investment company" as defined in the United States Internal Revenue
Code of 1986, as amended, that the sale of such Securities is
required in order to prevent the Trust from being deemed an
association taxable as a corporation for federal income tax
purposes;
(ix) if the Trust has elected to be taxed as a "regulated
investment company" as defined in the United States Internal Revenue
Code of 1986, as amended, that such sale is necessary or advisable
(i) to maintain the qualification of the Trust as a regulated
investment company or (ii) to provide funds to make any distribution
for a taxable year in order to avoid imposition of any excise taxes
on the Trust.
(b) In the event a Security is sold pursuant to Section 3.07(a)(v)
as a direct result of serious adverse credit factors affecting the issuer
of such Security and the Trust has elected to be taxes as a "regulated
investment company" as defined in the United States Internal Revenue Code
of 1986, as amended, then the Supervisory Servicer may, but is not
obligated, to direct the reinvestment of the proceeds of, the sale of
such Security in any other securities which meet the criteria necessary
for inclusion in such Trust on the Initial Date of Deposit.
(c) Upon receipt of such direction from the Supervisory Servicer,
upon which the Trustee shall rely, the Trustee shall proceed to sell or
liquidate the specified Securities in accordance with such direction, and
upon the receipt of the proceeds of any such sale or liquidation, after
deducting therefrom any fees and expenses of the Trustee connected with
such sale or liquidation and any brokerage charges, taxes or other
governmental charges shall deposit such net proceeds in the applicable
Capital Account; provided, however, that Zero Coupon Obligations may not
be sold to pay the fees and expenses of an Equity and Treasury Trust,
including the Trustee's fees, the Supervisory Servicer's fees and the
Evaluator's fees, unless the face amount of such Zero Coupon Obligations
shall not be reduced below $11 per Unit.
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale made pursuant to any
such direction or by reason of the failure of the Supervisory Servicer to
give any such direction, and in the absence of such direction the Trustee
shall have no duty to sell or liquidate any Securities under this
Section 3.07.
Section 3.08. Counsel. The Depositor may employ from time to time, as
it deems necessary or desirable, a firm of attorneys for any legal
services which may be required in connection with the Securities,
including any legal matters relating to the possible disposition or
acquisition of any Securities pursuant to any provisions hereof or for
any other reasons deemed advisable by the Depositor or the Trustee, in
their discretion. The fees and expenses of such counsel may, at the
discretion of the Depositor, be paid by the Trustee from the Income
Account and Capital Account as provided for in Section 3.05(a)(iii)
hereof.
Section 3.09. Trustee not Required to Amortize. Nothing in this
Indenture, or otherwise, shall be construed to require the Trustee to
make any adjustments between the Income and Capital Accounts by reason of
any premium or discount in respect of any of the Securities.
Section 3.10. Liability of Depositor. The Depositor shall be under no
liability to the Unitholders for any action taken or for refraining from
the taking of any action in good faith pursuant to this Indenture or for
errors in judgment, but shall be liable only for its own willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties hereunder. The Depositor may rely in good faith on any paper,
order, notice, list, affidavit, receipt, opinion, endorsement,
assignment, draft or any other document of any kind prima facie properly
executed and submitted to it by the Trustee, bond counsel or any other
persons pursuant to this Indenture and in furtherance of its duties.
Section 3.11. Notice to Depositor. In the event that the Trustee shall
have been notified at any time of any action to be taken or proposed to
be taken with respect to the Securities (including but not limited to the
making of any demand, direction, request, giving of any notice, consent
or waiver or the voting with respect to any amendment or supplement to
any indenture, resolution, agreement or other instrument under or
pursuant to which the Zero Coupon Obligations have been issued) the
Trustee shall promptly notify the Depositor and shall thereupon take such
action or refrain from taking any action as the Depositor shall in
writing direct; provided, however, that if the Depositor shall not within
five Business Days of the giving of such notice to the Depositor direct
the Trustee to take or refrain from taking any action, the Trustee shall
take such action or refrain from taking action, (i) so as to
insure that the Equity Securities are voted as closely as possible in the
same manner and the same general proportion, with respect to all
issues, as are shares of such Equity Securities that are held by owners
other than the Trust and (ii) as it, in its sole discretion, shall deem
advisable with respect to the Zero Coupon Obligations.
In the event that an offer by the issuer of any of the Securities or
any other party shall be made to issue new securities, or to exchange
securities, for Trust Securities, the Trustee shall reject such offer.
However, should any issuance, exchange or substitution be effected
notwithstanding such rejection or without an initial offer, any
securities, cash and/or property received shall be deposited hereunder
and shall be promptly sold, if securities or property, by the Trustee
unless the Depositor advises the Trustee to keep such securities, cash or
properties. The cash received in such exchange and cash proceeds of any
such sales shall be distributed to Unitholders on the next Income Account
Distribution Date in the manner set forth in Section 3.05 regarding
distributions from the Capital Account. The Trustee shall not be liable
or responsible in any way for depreciation or loss incurred by reason of
any such sale.
Neither the Depositor nor the Trustee shall be liable to any person
for any action or failure to take action pursuant to the terms of this
Section 3.11 other than failure to notify the Depositor.
Section 3.12. Replacement Securities. In the event that any contract
to purchase any Contract Security is not consummated in accordance with
its terms (a "Failed Contract Security"), the Depositor may instruct the
Trustee in writing either to effect a buy-in in accordance with the rules
of the market place where the Failed Contract Securities were purchased
or its clearing house or to purchase a replacement security (the
"Replacement Security") which has been selected by the Depositor or if
the Depositor does not provide such an instruction, the Trustee is hereby
directed either to effect a buy-in in accordance with the rules of the
market place where the Failed Contract Securities were purchased or its
clearing house or to purchase a Replacement Security out of funds held by
the Trustee pursuant to Section 3.03. Purchases of Replacement Securities
will be made subject to the conditions set forth below:
(a) The Replacement Securities shall be Zero Coupon
Obligations or Equity Securities as originally selected for deposit
in that series of the Trust and any Replacement Securities which are
Zero Coupon Obligations must have the same maturity value as the
Failed Contract Security and, as close as is reasonably practical,
the same maturity date, which must be on or prior to the Mandatory
Termination Date;
(b) The purchase of the Replacement Securities shall not
adversely affect the federal income tax status of the Trust;
(c) The purchase price of the Replacement Securities shall not
exceed the total amount of cash deposited, or the amount available
under the Letter of Credit deposited, by the Depositor at the time
of the deposit of the Failed Contract Security;
(d) The written instructions of the Depositor shall (i)
identify the Replacement Securities to be purchased, (ii) state that
the contract to purchase, if any, to be entered into by the Trustee
is satisfactory in form and substance and (iii) state that the
foregoing conditions of clauses (a) through (d) have been satisfied
with respect to the Replacement Securities; and
(e) The Replacement Securities shall be purchased within 30
days after the deposit of the Failed Contract Security.
Upon satisfaction of the foregoing conditions with respect to any
Replacement Securities which shall be certified by the Depositor in the
written instruction to the Trustee identifying the Replacement
Securities, the Trustee shall enter into the contract to purchase such
Replacement Securities and take all steps reasonably necessary to
complete the purchase thereof. Whenever a Replacement Security is
acquired by the Trustee pursuant to the provisions of this Section, the
Trustee will, as agent for the Depositor, not later than five days after
such acquisition, mail to each Unitholder a notice of such acquisition,
including an identification of the Securities eliminated and the
Securities acquired. Amounts in respect of the purchase price thereof on
account of principal shall be paid out of and charged against the cash
deposited, or the amounts available under the Letter of Credit deposited,
by the Depositor at the time of the deposit of the Failed Contract
Security. In the event the Trustee shall not consummate any purchase of
Replacement Securities pursuant to this Section 3.12, funds held for such
purchase shall be distributed in accordance with Section 2.01(d). Any
excess of the purchase price of a Failed Contract Security over the
purchase price of its corresponding Replacement Security shall be
refunded to the Depositor. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any
purchase made pursuant to, or any failure to make any purchase authorized
by, this Section 3.12. The Depositor shall not be liable for any failure
to instruct the Trustee to purchase any Replacement Securities, nor shall
the Trustee or Depositor be liable for errors of judgment in respect to
this Section 3.12; provided, however, that this provision shall not
protect the Depositor or the Trustee against any liability to which it
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder.
Section 3.13. Supervisory Servicer. Subject to Section 3.14 hereof, as
compensation for providing supervisory portfolio services under this
Indenture, the Supervisory Servicer shall receive, in arrears, against a
statement or statements therefor submitted to the Trustee monthly or
annually an aggregate annual fee in an amount which shall not exceed
$0.25 per 100 Units outstanding as of January 1 of such year except for a
Trust during the year or years in which an initial offering period as
determined in Section 4.01 of this Indenture occurs, in which case the
fee for a month is based on the number of Units outstanding at the end of
such month (such annual fee to be pro rated for any calendar year in
which the Supervisory Servicer provides services during less than the
whole of such year), but in no event shall such compensation when
combined with all compensation received from other series of the Fund for
providing such supervisory services in any calendar year exceed the
aggregate cost to the Supervisory Servicer for providing such services.
Such compensation may, from time to time, be adjusted provided that the
total adjustment upward does not, at the time of such adjustment, exceed
the percentage of the total increase, after the date hereof, in consumer
prices for services as measured by the United States Department of Labor
Consumer Price Index entitled "All Services Less Rent of Shelter" or
similar index, if such index should no longer be published. The consent
or concurrence of any Unitholder hereunder shall not be required for any
such adjustment or increase. Such compensation shall be paid by the
Trustee, upon receipt of invoice therefor from the Supervisory Servicer,
upon which, as to the cost incurred by the Supervisory Servicer of
providing services hereunder the Trustee may rely, and shall be charged
against the Income and/or Capital Accounts, in accordance with
Section 3.05.
If the cash balance in the Income and Capital Accounts shall be
insufficient to provide for amounts payable pursuant to this
Section 3.13, the Trustee shall have the power to sell (a) Securities
from the current list of Securities designated to be sold pursuant to
Section 5.02 hereof, or (b) if no such Securities have been so
designated, such Securities as the Trustee may see fit to sell in its own
discretion, and to apply the proceeds of any such sale in payment of the
amounts payable pursuant to this Section 3.13, provided however, that
Zero Coupon Obligations included in an Equity and Treasury Trust may not
be sold to pay for amounts payable pursuant to this Section 3.13.
Any moneys payable to the Supervisory Servicer pursuant to this
Section 3.13 shall be secured by a lien on the Fund prior to the interest
of Unitholders, but no such lien shall be prior to any lien in favor of
the Trustee under the provisions of Section 6.04 herein.
Except as the context otherwise requires the Supervisory Servicer
shall be subject to the provisions of Section 4.05 herein in the same
manner as it would if it were the Evaluator.
Section 3.14. Abatement of Compensation of the Trustee, Evaluator and
Supervisory Servicer in an Equity and Treasury Trust. With respect to an
Equity and Treasury Trust, to the extent the cash balances of the Income
and Capital Accounts and the proceeds of sale of Securities other than
the Zero Coupon Obligations shall be insufficient to pay all expenses of
such Trust provided for herein, such expenses shall be paid in the
following order: (a) expenses and disbursements incurred by, and
indemnification due, the Trustee, including legal and auditing expenses
and such amounts as the Trustee may reasonably require as a reserve for
future expenses, including any reserve for its indemnification, (b)
compensation of the Trustee for extraordinary services, (c) compensation
of the Trustee for its ordinary services, (d) compensation of the
Evaluator, and (e) compensation of the Supervisory Servicer and
Depositor's counsel; provided, further that notwithstanding any other
provision to the contrary in this Indenture and that in the event of such
insufficiency, the Trustee shall continue to pay out of its own assets
all expenses of such Trust with the exception of items (d) and (e) above
in order that no Zero Coupon Obligations be sold to pay the fees and
expenses of an Equity and Treasury Trust. The parties hereto agree that
in the event that their fees and expenses are abated pursuant to this
Section 3.14, they forever waive any right to reimbursement for such fees
and expenses abated.
Section 3.15. Deferred Sales Charge. If the Prospectus related to the
Trust specifies a deferred sale charge, the Trustee shall, on the dates
specified in and as permitted by such Prospectus, withdraw from the
Capital Account, an amount per Unit specified in such Prospectus and
credit such amount to a special non-Trust account maintained at the
Trustee out of which the deferred sales charge will be distributed to the
Depositor. If the balance in the Capital Account is insufficient to make
any such withdrawal, the Trustee shall, as directed by the Depositor,
either advance funds in an amount equal to the proposed withdrawal and be
entitled to reimbursement of such advance upon the deposit of additional
moneys in the Capital Account, sell Securities and credit the proceeds
thereof to such special Depositor's account or credit (if permitted by
law) Securities in kind to such special Depositor's Account. If a
Unitholder redeems Units prior to full payment of the deferred sales
charge, the Trustee shall, if so provided in the related Prospectus, on
the Redemption Date, withhold from the Redemption Price payable to such
Unitholder an amount equal to the unpaid portion of the deferred sales
charge and distribute such amount to such special Depositor's Account.
The Depositor may at any time instruct the Trustee in writing to
distribute to the Depositor cash or Securities previously credited to the
special Depositor's Account.
Section 3.16. Reclaiming Foreign Taxes. The Trustee shall use
reasonable efforts to reclaim or recoup any amounts of non-U.S. tax paid
by the Trust or withheld from income received by the Trust to which the
Trust may be entitled as a refund.
Section 3.17. Foreign Currency Exchange. Unless the Depositor shall
otherwise direct, whenever funds are received by the Trustee in foreign
currency, upon the receipt thereof or, if such funds are to be received
in respect of a sale of Securities, concurrently with the contract of the
sale for the Security (in the latter case the foreign exchange contract
to have a settlement date coincident with the relevant contract of sale
for the Security), the Depositor shall enter into a foreign exchange
contract for the conversion of such funds to U.S. dollars. The Depositor
shall have no liability for any loss or depreciation resulting from such
action taken.
Article IV
Evaluation of Securities; Evaluator
Section 4.01. Evaluation by Evaluator. (a) The Evaluator shall
determine separately, and shall promptly furnish to the Trustee and the
Depositor upon request, the value of each issue of Securities (including
Contract Securities) ("Evaluation") as of the close of trading on the New
York Stock Exchange or such other time stated in the Prospectus related
to a Trust (the "Evaluation Time") (i) on each Business Day during the
period which the Units are being offered for sale to the public and (ii)
on any other day on which a Trust Evaluation is to be made pursuant to
Section 5.01 or which is requested by the Depositor or the Trustee. As
part of the Trust Evaluation, the Evaluator shall determine separately
and promptly furnish to the Trustee and the Depositor upon request the
Evaluation of each issue of Securities initially deposited in a Trust on
the Initial Date of Deposit. The Evaluator's determination of the
offering prices of the Securities on the Initial Date of Deposit shall be
included in the Schedules attached to the Trust Agreement.
(b) During the initial offering period such Evaluation shall be
made in the following manner: if the Securities are listed on a national
or foreign securities exchange, such Evaluation shall generally be based
on the last available sale price on or immediately prior to the
Evaluation Time on the exchange which is the principal market therefor,
which shall be deemed to be the New York Stock Exchange if the Securities
are listed thereon (unless the Evaluator deems such price inappropriate
as a basis for evaluation) or, if there is no such available sale price
on such exchange at the last available ask price of the Equity
Securities. If the Securities are not so listed or, if so listed, the
principal market therefor is other than on such exchange or there is no
such available sale price on such exchange, such Evaluation shall
generally be based on the following methods or any combination thereof
whichever the Evaluator deems appropriate: (i) in the case of Equity
Securities, on the basis of the current ask price on the over-the-counter
market (unless the Evaluator deems such price inappropriate as a basis
for evaluation), (ii) on the basis of current offering prices for the
Zero Coupon Obligations as obtained from investment dealers or brokers
who customarily deal in securities comparable to those held by the Fund,
(iii) if offering prices are not available for the Zero Coupon
Obligations or the Equity Securities, on the basis of offering or ask
price for comparable securities, (iv) by determining the valuation of the
Zero Coupon Obligations or the Equity Securities on the offering or ask
side of the market by appraisal or (v) by any combination of the above.
If the Trust holds Securities denominated in a currency other than U.S.
dollars, the Evaluation of such Security shall be converted to U.S.
dollars based on current offering side exchange rates (unless the
Evaluator deems such prices inappropriate as a basis for valuation). The
Evaluator may add to the Evaluation of each Security which is principally
traded outside of the United States the amount of any commissions and
relevant taxes associated with the acquisition of the Security.
As used herein, the closing sale price is deemed to mean the most
recent closing sale price on the relevant securities exchange immediately
priorto the Evaluation time. For each Evaluation, the Evaluator shall
alsoconfirm and furnish to the Trustee and the Depositor, on the basis of
theinformation furnished to the Evaluator by the Trustee as to the value
ofall Trust assets other than Securities, the calculation of the
Trust Evaluation to be computed pursuant to Section 5.01.
(c) For purposes of the Trust Evaluations required by Section 5.01
in determining Redemption Value and Unit Value, Evaluation of the
Securities shall be made in the manner described in Section 4.01(b), on
the basis of current bid prices for the Zero Coupon Obligations, the bid
side value of the relevant currency exchange rate expressed in U.S.
dollars and, except in those cases in which the Equity Securities are
listed on a national or foreign securities exchange and the last
available sale prices are utilized, on the basis of the last available
bid price of the Equity Securities. In addition, the Evaluator (i) shall
not make the addition specified in the forth sentence of Section 4.01(b)
and (ii) may reduce the Evaluation of each Security which is principally
traded outside of the United States by the amount of any liquidation
costs and any capital gains or other taxes which would be incurred by the
Trust upon the sale of such Security, such taxes being computed as if the
Security were sold on the date of the Evaluation.
Section 4.02. Information for Unitholders. For the purpose of
permitting Unitholders to satisfy any reporting requirements of
applicable federal or state tax law, the Evaluator shall make available
to the Trustee and the Trustee shall transmit to any Unitholder upon
request any determinations made by it pursuant to Section 4.01.
Section 4.03. Compensation of Evaluator. Subject to the provision of
Section 3.15 hereof, as compensation for its services hereunder, the
Evaluator shall receive against a statement or statements therefor
submitted to the Trustee monthly or annually, an amount equal to the
amount specified as compensation for the Evaluator in the Prospectus and
will be computed based on the number of Units outstanding as of January 1
of such year except for a Trust during the year or years in which an
initial offering period as determined in Section 4.01 of this Indenture
occurs, in which case the fee for a month is based on the number of Units
outstanding at the end of such month (such annual fee to be pro rated for
any calendar year in which the Evaluator provides services during less
than the whole of such year). Such compensation may, from time to time,
be adjusted provided that the total adjustment upward does not, at the
time of such adjustment, exceed the percentage of the total increase,
after the date hereof, in consumer prices for services as measured by the
United States Department of Labor Consumer Price Index entitled "All
Services Less Rent of Shelter" or similar index, if such index shall no
longer be published. The consent or concurrence of any Unitholder
hereunder shall not be required for any such adjustment or increase. Such
compensation shall be charged by the Trustee, upon receipt of invoice
therefor from the Evaluator, against the Income and Capital Accounts. If
the cash balance in the Income and Capital Accounts shall be insufficient
to provide for amounts payable pursuant to this Section 4.03, the Trustee
shall have the power to sell (a) Securities from the current list of
Securities designated to be sold pursuant to Section 5.02 hereof or (b)
if no such Securities have been so designated, such Securities as the
Trustee may see fit to sell in its own discretion, and to apply the
proceeds of any such sale in payment of the amounts payable pursuant to
this Section 4.03, provided however, that with respect to an Equity and
Treasury Trust Zero Coupon Obligations may not be sold to pay for amounts
payable pursuant to this Section 4.03.
Section 4.04. Liability of Evaluator. The Trustee, the Depositor and
the Unitholders may rely on any Evaluation furnished by the Evaluator and
shall have no responsibility for the accuracy thereof. The
determinations made by the Evaluator hereunder shall be made in good
faith upon the basis of the best information available to it. The
Evaluator shall be under no liability to the Trustee, the Depositor or
the Unitholders for errors in judgment; provided, however, that this
provision shall not protect the Evaluator against any liability to which
it would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder.
'Section 4.05. Resignation and Removal of Evaluator; Successor'. (a)
The Evaluator may resign and be discharged hereunder, by executing an
instrument in writing resigning as Evaluator and filing the same with the
Depositor and the Trustee, not less than 60 days before the date
specified in such instrument when, subject to Section 4.05(e), such
resignation is to take effect. Upon receiving such notice of
resignation, the Depositor and the Trustee shall use their best efforts
to appoint a successor evaluator having qualifications and at a rate of
compensation satisfactory to the Depositor and the Trustee. Such
appointment shall be made by written instrument executed by the Depositor
and the Trustee, in duplicate, one copy of which shall be delivered to
the resigning Evaluator and one copy to the successor evaluator. The
Depositor or the Trustee may remove the Evaluator at any time upon 30
days' written notice and appoint a successor evaluator having
qualifications and at a rate of compensation satisfactory to the
Depositor and the Trustee. Such appointment shall be made by written
instrument executed by the Depositor and the Trustee, in duplicate, one
copy of which shall be delivered to the Evaluator so removed and one copy
to the successor evaluator. Notice of such resignation or removal and
appointment of a successor evaluator shall be mailed by the Trustee to
each Unitholder then of record.
(b) Any successor evaluator appointed hereunder shall execute,
acknowledge and deliver to the Depositor and the Trustee an instrument
accepting such appointment hereunder, and such successor evaluator
without any further act, deed or conveyance shall become vested with all
the rights, powers, duties and obligations of its predecessor hereunder
with like effect as if originally named Evaluator herein and shall be
bound by all the terms and conditions of this Indenture.
(c) In case at any time the Evaluator shall resign and no successor
evaluator shall have been appointed and have accepted appointment within
30 days after notice of resignation has been received by the Depositor
and the Trustee, the Evaluator may forthwith apply to a court of
competent jurisdiction for the appointment of a successor evaluator.
Such court may thereupon after such notice, if any, as it may deem proper
and prescribe, appoint a successor evaluator.
(d) Any corporation into which the Evaluator hereunder may be
merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Evaluator hereunder shall
be a party, shall be the successor evaluator under this Indenture without
the execution or filing of any paper, instrument or further act to be
done on the part of the parties hereto, anything herein, or in any
agreement relating to such merger or consolidation, by which the
Evaluator may seek to retain certain powers, rights and privileges
theretofore obtaining for any period of time following such merger or
consolidation, to the contrary notwithstanding.
(e) Any resignation or removal of the Evaluator and appointment of
a successor evaluator pursuant to this Section shall become effective
upon acceptance of appointment by the successor evaluator as provided in
subsection (b) hereof.
Article V Evaluation, Redemption, Purchase, Transfer, Interchange or
Replacement of Units Article V
Evaluation, Redemption, Purchase, Transfer, Interchange or Replacement of
Units
Section 5.01. Trust Evaluation. As of the Evaluation Time (a) on the
last Business Day of each year, (b) on the day on which any Unit is
tendered for redemption and (c) on any other day desired by the Trustee
or requested by the Depositor, the Trustee shall: Add (i) all moneys on
deposit in a Trust (excluding (1) cash, cash equivalents or Letters of
Credit deposited pursuant to Section 2.01 hereof for the purchase of
Contract Securities, unless such cash or Letters of Credit have been
deposited in the Income and Capital Accounts because of failure to apply
such moneys to the purchase of Contract Securities pursuant to the
provisions of Sections 2.01, 3.02 and 3.03 hereof and (2) moneys credited
to the Reserve Account pursuant to Section 3.04 hereof), plus (ii) the
aggregate Evaluation of all Securities (including Contract Securities) on
deposit in such Trust as is determined by the Evaluator (such Evaluation
to be made on the basis of bid prices (if Zero Coupon Obligations are
sold on such day, then such Evaluation for the Zero Coupon Obligations
shall be at the weighted average of the execution prices for all Zero
Coupon Obligations sold on such day) for the Zero Coupon Obligations (if
any are in the Trust) and the aggregate underlying value of the Equity
Securities as determined in Section 4.01(b) for the purpose of computing
redemption value of Units as set forth in Section 5.02 hereof), plus
(iii) all other income from the Securities (including dividends
receivable on the Equity Securities trading ex-dividend as of the date of
such valuation) as of the Evaluation Time on the date of such Evaluation
together with all other assets of such Trust. For each such Evaluation
there shall be deducted from the sum of the above (i) amounts
representing any applicable taxes or governmental charges payable out of
the respective Trust and for which no deductions shall have previously
been made for the purpose of addition to the Reserve Account, (ii)
amounts representing estimated accrued expenses of such Trust including
but not limited to unpaid fees and expenses of the Trustee, the
Evaluator, the Supervisory Servicer, the Depositor and counsel, in each
case as reported by the Trustee to the Depositor on or prior to the date
of evaluation, and (iii) any moneys identified by the Trustee, as of the
date of the Evaluation, as held for distribution to Unitholders of record
as of an Income or Capital Account Record Date or for payment of the
Redemption Value of Units tendered prior to such date. The resulting
figure is herein called a "Trust Evaluation." The value of the pro rata
share of each Unit of the respective Trust determined on the basis of any
such evaluation shall be referred to herein as the "Unit Value." Amounts
receivable by the Trust in foreign currency shall be converted by the
Trustee to U.S. dollars based on current exchange rates, in the same
manner as provided in Section 4.01(b) or 4.01(c), as applicable, for the
conversion of the valuation of foreign Equity Securities, and the
Evaluator shall report such conversion with each Evaluation made pursuant
to Section 4.01.
For each day on which the Trustee shall make a Trust Evaluation it
shall also determine "Unit Value" for such day. Such "Unit Value" shall
be determined by dividing said Trust Evaluation by the number of Units
outstanding on such day.
'Section 5.02. Redemptions by Trustee; Purchases by Depositor'. Any
Certificate tendered for redemption by a Unitholder or his duly
authorized attorney to the Trustee at its corporate trust office in the
City of New York, or any Unit in uncertificated form tendered by means of
an appropriate request for redemption in form approved by the Trustee
shall be paid by the Trustee on the seventh calendar day following the
day on which tender for redemption is made in proper form, provided that
if such day of payment is not a Business Day, then such payment shall be
on the first Business Day prior thereto (being herein called the
"Settlement Date"). Subject to (a) the next succeeding paragraph, (b)
payment by such Unitholder of any tax or other governmental charges which
may be imposed thereon and (c) payments in the form of In Kind
Distributions (as defined below), such redemption is to be made by
payment of cash equivalent to the Unit Value determined on the basis of a
Trust Evaluation made in accordance with Section 5.01 determined by the
Trustee as of the Evaluation Time on the Redemption Date, multiplied by
the number of Units tendered for redemption (herein called the
"Redemption Value"), or if the Unitholder wishes to redeem a number of
Units less than all those so tendered, multiplied by the number of Units
so designated by such Unitholder for redemption. Units received for
redemption by the Trustee on any day after the Evaluation Time will be
held by the Trustee until the next day on which the New York Stock
Exchange is open for trading and will be deemed to have been tendered on
such day for redemption at the Redemption Value computed on that day.
The portion of the Redemption Value which represents income shall be
withdrawn from the Income Account to the extent available. The balance
paid on any Redemption Value, including income not paid from the Income
Account, if any, shall be withdrawn from the Capital Account to the
extent that funds are available for such purpose. If such available
funds shall be insufficient, the Trustee shall sell such Securities as
have been designated on the current list for such purpose by the
Supervisory Servicer, as hereinafter in this Section 5.02 provided, in
amounts as the Trustee in its discretion shall deem advisable or
necessary in order to fund the Capital Account for purposes of such
redemption, provided however, that with respect to an Equity and Treasury
Trust Zero Coupon Obligations may not be sold unless the Depositor, which
may rely on the advice of the Supervisory Servicer, has determined that
the face value of the Zero Coupon Obligations remaining after such
proposed sale, divided by the number of Units outstanding after the
tendered Units are redeemed, shall equal or exceed $11.00; a written
certification as to such determination shall be executed by the Depositor
and preserved in the Trust records. In the event that (i) Zero Coupon
Obligations may not be sold to fund a redemption of Units pursuant to the
preceding sentence, and (ii) no other Trust assets are available for
liquidation to fund such redemption, the Trustee will advance to such
Trust such amounts as may be necessary to pay the Redemption Value of the
tendered Units. The Trustee shall be reimbursed the amount of any such
advance from such Trust as soon as Zero Coupon Obligations may be sold in
such amount as will not reduce the face amount of Zero Coupon Obligations
still held in such Trust below the amount required to distribute $11.00
per Unit from the proceeds of the sale or maturity of the Zero Coupon
Obligations upon the termination of such Trust on the Mandatory
Termination Date. The Trustee shall be deemed to be the beneficial owner
of the Zero Coupon Obligations held in a Trust to the extent of all
amounts advanced by it pursuant to this Section 5.02, and such advances
shall be secured by a lien on such Trust prior to the interest of
Unitholders, provided, however, that the Trustee's beneficial interest in
such Trust and the lien securing such interest shall not at any time
exceed such amount as would reduce the amount distributable from such
Trust upon maturity or sale of Zero Coupon Obligations upon the
termination of such Trust on the Mandatory Termination Date to less than
$11.00 per Unit. Sale of Securities by the Trustee shall be made in such
manner as the Trustee shall determine will bring the best price
obtainable for a Trust, subject to any limitations as to the minimum
amount of Equity Securities to be sold specified in the Trust Agreement.
In the event that either (i) funds are withdrawn from the Capital Account
and are applied to the payment of income upon any redemption of Units or
(ii) Securities are sold for the payment of the Redemption Value and any
portion of the proceeds of such sale is applied to the payment of income
upon such redemption, then, in either such event, the Capital Account
shall be reimbursed therefor at such time as sufficient funds may be next
available in the Income Account for such purpose.
The Trustee may in its discretion, and shall when so directed by the
Depositor in writing, suspend the right of redemption for Units of a
Trust or postpone the date of payment of the Redemption Value for more
than seven calendar days following the day on which tender for redemption
is made (i) for any period during which the New York Stock Exchange is
closed other than customary weekend and holiday closings or during which
trading on the New York Stock Exchange is restricted; (ii) for any period
during which an emergency exists as a result of which disposal by such
Trust of the Securities is not reasonably practicable or it is not
reasonably practicable fairly to determine in accordance herewith the
value of the Securities; or (iii) for such other period as the Securities
and Exchange Commission may by order permit, and shall not be liable to
any person or in any way for any loss or damage which may result from any
such suspension or postponement.
Not later than the close of business on the day of tender of any
Certificate or Unit for redemption by a Unitholder other than the
Depositor, the Trustee shall notify the Depositor of such tender. The
Depositor shall have the right to purchase such Certificate or Unit by
notifying the Trustee of its election to make such purchase as soon as
practicable thereafter but in no event subsequent to the close of
business on the first Business Day after the day on which such
Certificate or Unit was tendered for redemption. Such purchase shall be
made by payment by the Depositor to the Unitholder on the Redemption Date
of an amount not less than the Redemption Value which would otherwise be
payable by the Trustee to such Unitholder. So long as the Depositor
maintains a bid in the secondary market, the Depositor may repurchase the
Units tendered to the Trustee for redemption by the Depositor but shall
be under no obligation to maintain any bids and may, at any time while so
maintaining such bids, cease to do so immediately at any time or from
time to time without notice.
Any Units so purchased by the Depositor may at the option of the
Depositor be tendered to the Trustee for redemption at the corporate
trust office of the Trustee in the manner provided in the first paragraph
of this Section 5.02.
Notwithstanding the foregoing provisions of this Section 5.02, until
the close of business on the second Business Day after the day on which
such Certificate or Unit was tendered for redemption the Trustee is
hereby irrevocably authorized in its discretion, in the event that the
Depositor does not purchase any Units tendered to the Trustee for
redemption, or in the event that a Unit is being tendered by the
Depositor for redemption, in lieu of redeeming Units, to sell Units in
the over-the-counter market through any broker-dealer of its choice for
the account of the tendering Unitholder at prices which will return to
the Unitholder an amount in cash, net after deducting brokerage
commissions, transfer taxes and other charges, equal to or in excess of
the Redemption Value which such Unitholder would otherwise be entitled to
receive on redemption pursuant to this Section 5.02. The Trustee shall
pay to the Unitholder the net proceeds of any such sale on the day on
which such Unitholder would otherwise be entitled to receive payment of
the Redemption Value hereunder.
Notwithstanding anything to the contrary in this Section 5.02, any
Unitholder may, if such Unitholder tenders at least that number of
Units referred to in the Prospectus for redemption (or such other
amount of Units stated in the Prospectus for the Trust), request at the
time of tender to receive from the Trustee in lieu of cash such
Unitholder's pro rata share of each Equity Security then held by such
Trust, provided that the Equity Security is principally traded on a
United States national securities exchange. Such tendering Unitholder
will receive his pro rata number of whole shares of each of such
Equity Securities comprising the portfolio of such Trust and cash
from the Capital Account equal to the value of the fractional shares
and any Equity Securities principally traded on a foreign securities
exchange to which such tendering Unitholder is entitled and in the
case of an Equity and Treasury Trust such Unitholder's pro rata share
of the thenoutstanding principal value of the Zero Coupon Obligations.
Such pro rata share of each Equity Security and the related cash to
which such tendering Unitholder is entitled is referred to herein as an
"In Kind Distribution." An In Kind Distribution will be made by the
Trustee through the distribution of each of the Equity Securities in
book-entry form to the account of the Unitholder's bank or
broker-dealer at Depository Trust Company. If funds in the
Capital Account are insufficient to cover the required cash distribution
to the tendering Unitholder, the Trustee may sell Securities according
to the criteria discussed herein.
The Supervisory Servicer shall maintain with the Trustee a current
list of Securities designated to be sold for the purpose of funding the
Capital Account for redemption of Units tendered for redemption and, to
the extent necessary, for payment of expenses under this Indenture. In
connection therewith, the Depositor may specify in the Trust Agreement
the minimum amounts of any Securities to be sold at any one time. If the
Supervisory Servicer shall for any reason fail to maintain such a list,
the Trustee may in its sole discretion designate a current list of
Securities for such purposes but prior to the sale of any Zero Coupon
Obligations the Trustee shall receive that certification described in the
second paragraph of this Section 5.02. The net proceeds of any sale of
Securities from such list representing income shall be credited to the
Income Account and then disbursed therefrom for payment of expenses and
payments to Unitholders required to be paid under this Indenture. Any
balance remaining after such disbursements shall be credited to the
Capital Account and may be used to acquire additional Securities (if
permitted by applicable rules and regulations as indicated by an opinion
of counsel) or for any of the other purposes set forth under the
Indenture.
The Depositor, Supervisory Servicer and Trustee shall not be liable
or responsible in any way for depreciation or loss incurred by reason of
any sale of Securities made pursuant to this Section 5.02.
Certificates evidencing Units redeemed pursuant to this Section 5.02
shall be canceled by the Trustee and the Unit or Units evidenced by such
Certificates shall be terminated by such redemptions. In the event that
a Certificate shall be tendered representing a number of Units greater
than those requested to be redeemed by the Unitholder, the Trustee shall
issue to such Unitholder, unless such Unitholder requests such Units be
uncertificated, upon payment of any tax or charges of the character
referred to in the second paragraph of Section 5.03, a new Certificate
evidencing the Units representing the balance of the Certificate so
tendered and not redeemed.
Section 5.03. Transfer or Interchange of Units. Units will be held in
uncertificated form unless the Unitholder requests in writing to have a
Certificate or Certificates representing such Units be issued. Units may
be transferred by the registered holder thereof by presentation and
surrender of such Units and Certificates, if issued, at the corporate
trust office of the Trustee, properly endorsed or accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Trustee and executed by the Unitholder or his authorized attorney,
whereupon new Units or, if requested, a new registered Certificate or
Certificates for the same number of Units of the same Trust executed by
the Trustee and the Depositor will be issued in exchange and substitution
therefor and Units surrendered shall be canceled by the Trustee. The
registered holder of any Unit may transfer such Unit by the presentation
of transfer instructions and Certificates, if issued, to the Trustee at
the corporate trust office of the Trustee accompanied by such documents
as the Trustee deems necessary to evidence the authority of the person
making such transfer and executed by the registered holder or his
authorized attorney, whereupon the Trustee shall make proper notification
of such transfer on the registration books of the Trustee. Unitholders
holding their Units in uncertificated form may at any time request the
Trustee to issue Certificates for such Units and Unitholders holding
Certificates may at any time request that their Units be held in
uncertificated form. The Trustee shall, upon receipt of such request in
form satisfactory to it, accompanied by Certificates, if any, issue such
Certificates, or cancel such Certificate and make such appropriate
notations on its books, as may be requested by such Unitholder; provided
that the Trustee is entitled to specify the minimum denomination of any
Certificate issued. Certificates issued pursuant to this Indenture are
interchangeable for one or more other Certificates in an equal aggregate
number of Units of the same Trust and all Certificates issued shall be
issued in denominations of one Unit or any whole multiple thereof as may
be requested by the Unitholder. The Trustee may deem and treat the
registered Unitholder as the owner of the Units whether or not held in
certificated form for all purposes hereunder and in either case the
Trustee shall not be affected by any notice to the contrary, nor be
liable to any person or in any way for so deeming and treating the person
in whose name any Certificate shall be so registered.
A sum sufficient to pay any tax or other governmental charge that
may be imposed in connection with any such transfer or interchange shall
be paid by the Unitholder to the Trustee. The Trustee may require a
Unitholder to pay a reasonable fee for each new Certificate issued on any
such transfer or interchange.
All Certificates canceled pursuant to this Indenture shall be
disposed of by the Trustee without liability on its part.
Section 5.04. Certificates Mutilated, Destroyed, Stolen or Lost. In
case any Certificate shall become mutilated, destroyed, stolen or lost,
the Trustee shall execute and deliver a new Certificate, if requested, in
exchange and substitution therefor upon the Unitholder's furnishing the
Trustee with proper identification and satisfactory indemnity, complying
with such other reasonable regulations and conditions as the Trustee may
prescribe and paying such expenses as the Trustee may incur. Any
mutilated Certificate shall be duly surrendered and canceled before any
new Certificate shall be issued in exchange and substitution therefor.
Upon the issuance of any new Certificate, a sum sufficient to pay any tax
or other governmental charge and the fees and expenses of the Trustee may
be imposed. Any such new Certificate issued pursuant to this
Section shall constitute complete and indefeasible evidence of ownership
in the related Trust, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
In the event the related Trust has terminated or is in the process
of termination, the Trustee may, instead of issuing a new Certificate in
exchange and substitution for any Certificate which shall have become
mutilated or shall have been destroyed, stolen or lost, make the
distributions in respect of such mutilated, destroyed, stolen or lost
Certificate (without surrender thereof except in the case of a mutilated
Certificate) as provided in Section 8.02 hereof if the Trustee is
furnished with such security or indemnity as it may require to save it
harmless, and in the case of destruction, loss or theft of a Certificate,
evidence to the satisfaction of the Trustee of the destruction, loss or
theft of such Certificate and of the ownership thereof.
Section 5.05. Rollover of Units. (a) If the Depositor shall offer a
subsequent series of the Trusts (the "New Series"), the Trustee shall, on
each Rollover Notification Date, include a form of election (which may be
included in the notice sent to Unitholders specified in Section 8.02)
whereby Unitholders, whose redemption distribution would be in an amount
sufficient to purchase at least one Unit of the New Series, may elect to
have their Units redeemed in kind in the manner provided in Section 5.02,
the Securities included in the redemption distribution sold, and the cash
proceeds applied by the Distribution Agent to purchase Units of the New
Series, all as hereinafter provided. The Trustee shall honor properly
completed election forms returned to the Trustee, accompanied by any
Certificate evidencing Units tendered for redemption or a properly
completed redemption request with respect to uncertificated Units, by its
close of business five days prior to the Special Redemption Date.
All Units so tendered by a Unitholder (a "Rollover Unitholder")
shall be redeemed and canceled on the Special Redemption Date. Subject
to payment by such Rollover Unitholder of any tax or other governmental
charges which may be imposed thereon, such redemption is to be made in
kind pursuant to Section 5.02 by distribution of cash and/or Securities
to the Distribution Agent on the Special Redemption Date of the net asset
value (determined on the basis of the Trust Evaluation as of the Special
Redemption Date in accordance with Section 4.01) multiplied by the number
of Units being redeemed (herein called the "Rollover Distribution"). Any
Securities that are made part of the Rollover Distribution shall be
valued for purposes of the redemption distribution as of the Special
Redemption Date.
All Securities included in a Unitholder's Rollover Distribution
shall be sold by the Distribution Agent on the Special Redemption Date
specified in the Prospectus pursuant to the Depositor's direction, and
the Distribution Agent may employ the Depositor as broker or agent in
connection with such sales. For such brokerage services, the Depositor
shall be entitled to compensation at its customary rates, provided
however, that its compensation shall not exceed the amount authorized by
applicable Securities laws and regulations. In the event the Depositor
does not direct the manner in which Securities are to be sold, the
Securities shall be sold in such manner as the Distribution Agent, in its
sole discretion, shall determine. The Distribution Agent shall have no
responsibility for any loss or depreciation incurred by reason of any
sale made pursuant to this Section.
Upon each trade date for sales of Securities included in the
Rollover Unitholder's Rollover Distribution, the Distribution Agent
shall, as agent for such Rollover Unitholder, enter into a contract with
the Depositor to purchase from the Depositor Units of the New Series (if
any), at the public offering price for such Units on such day as shall be
described in the Prospectus for the Trusts. Such contract shall provide
for purchase of the maximum number of Units of the New Series whose
purchase price is equal to or less than the cash proceeds held by the
Distribution Agent for the Unitholder on such day (including therein the
proceeds anticipated to be received in respect of Securities traded on
such day net of all brokerage fees, governmental charges and any other
expenses incurred in connection with such sale), to the extent Units are
available for purchase from the Depositor. In the event a sale of
Securities included in the Rollover Unitholder's redemption distribution
shall not be consummated in accordance with its terms, the Distribution
Agent shall apply the cash proceeds held for such Unitholder as of the
settlement date for the purchase of Units of the New Series to purchase
the maximum number of units which such cash balance will permit, and the
Depositor agrees that the settlement date for Units whose purchase was
not consummated as a result of insufficient funds will be extended until
cash proceeds from the Rollover Distribution are available in a
sufficient amount to settle such purchase. If the Unitholder's Rollover
Distribution will produce insufficient cash proceeds to purchase all of
the Units of the New Series contracted for, the Depositor agrees that the
contract shall be rescinded with respect to the Units as to which there
was a cash shortfall without any liability to the Rollover Unitholder or
the Distribution Agent. Any cash balance remaining after such purchase
shall be distributed within a reasonable time to the Rollover Unitholder
by check mailed to the address of such Unitholder on the registration
books of the Trustee. Units of the New Series will be uncertificated
unless and until the Rollover Unitholder requests a certificate. Any
cash held by the Distribution Agent shall be held in a non-interest
bearing account which will be of benefit to the Distribution Agent in
accordance with normal banking procedures. Neither the Trustee nor the
Distribution Agent shall have any responsibility or liability for loss or
depreciation resulting from any reinvestment made in accordance with this
paragraph, or for any failure to make such reinvestment in the event the
Depositor does not make Units available for purchase.
(b) Notwithstanding the foregoing, the Depositor may, in its
discretion at any time, decide not to offer a New Series in the future,
and if so, this Section 5.05 concerning the Rollover of Units shall be
inoperative.
(c) The Distribution Agent shall receive no fees for performing its
duties hereunder. The Distribution Agent shall, however, be entitled to
receive reimbursement from the Trust for any and all expenses and
disbursements to the same extent as the Trustee is permitted
reimbursement hereunder.
(d) Notwithstanding the foregoing, in lieu of selling Securities on
the open market the Distribution Agent may sell Securities from a
terminating Trust into the corresponding New Series if those Securities
continue to meet the New Series' strategy. The price for those
Securities will be the closing sale price on the sale date on the
exchange where the Securities are principally traded, as certified by the
Sponsor.
Article VI
Trustee
Section 6.01. General Definition of Trustee's Liabilities, Rights and
Duties. The Trustee shall in its discretion undertake such action as it
may deem necessary at any and all times to protect each Trust and the
rights and interests of the Unitholders pursuant to the terms of this
Indenture; provided, however, that the expenses and costs of such
actions, undertakings or proceedings shall be reimbursable to the Trustee
from the Income and Capital Accounts of such Trust, and the payment of
such costs and expenses shall be secured by a lien on such Trust prior to
the interest of Unitholders, subject to the provisions of Section 3.14.
In addition to and notwithstanding the other duties, rights,
privileges and liabilities of the Trustee as otherwise set forth, the
liabilities of the Trustee are further defined as follows:
(a) All moneys deposited with or received by the Trustee
hereunder related to a Trust shall be held by it without interest in
trust within the meaning of the Investment Company Act of 1940, as
part of such Trust or the Reserve Account of such Trust until
required to be disbursed in accordance with the provisions of this
Indenture, and such moneys will be segregated by separate
recordation on the trust ledger of the Trustee so long as such
practice preserves a valid preference under applicable law, or if
such preference is not so preserved the Trustee shall handle such
moneys in such other manner as shall constitute the segregation and
holding thereof in trust within the meaning of the Investment
Company Act of 1940.
(b) The Trustee shall be under no liability for any action
taken in good faith on any appraisal, paper, order list, demand,
request, consent, affidavit, notice, opinion, direction, evaluation,
endorsement, assignment, resolution, draft or other document,
whether or not of the same kind, prima facie properly executed, or
for the disposition of moneys, Securities, Units, or Certificates,
pursuant to this Indenture, or in respect of any evaluation which it
is required to make or is required or permitted to have made by
others under this Indenture or otherwise, except by reason of its
own negligence, lack of good faith or willful misconduct, provided
that the Trustee shall not in any event be liable or responsible for
any evaluation made by the Evaluator. The Trustee may construe any
of the provisions of this Indenture, insofar as the same may appear
to be ambiguous or inconsistent with any other provisions hereof,
and any construction of any such provisions hereof by the Trustee in
good faith shall be binding upon the parties hereto.
(c) The Trustee shall not be responsible for or in respect of
the recitals herein, the validity or sufficiency of this Indenture
or for the due execution hereof by the Depositor, the Supervisory
Servicer, or the Evaluator, or for the form, character, genuineness,
sufficiency, value or validity of any of the Securities (except that
the Trustee shall be responsible for the exercise of due care in
determining the genuineness of Securities delivered to it pursuant
to contracts for the purchase of such Securities) or for or in
respect of the validity or sufficiency of the Units or of the
Certificates (except for the due execution thereof by the Trustee)
or for the due execution thereof by the Depositor, and the Trustee
shall in no event assume or incur any liability, duty or obligation
to any Unitholder or the Depositor other than as expressly provided
for herein. The Trustee shall not be responsible for or in respect
of the validity of any signature by or on behalf of the Depositor,
the Supervisory Servicer or the Evaluator.
(d) The Trustee shall be under no obligation to appear in,
prosecute or defend any action which in its opinion may involve it
in expense or liability, unless as often as required by the Trustee
it shall be furnished with reasonable security and indemnity against
such expense or liability, and any pecuniary cost of the Trustee
from such actions shall be deductible from and a charge against the
Income and Capital Accounts of the affected Trust or Trusts. The
Trustee shall, in its discretion, undertake such action as it may
deem necessary at any and all times to protect the Fund and the
rights and interests of the Unitholders pursuant to the terms of
this Indenture, provided however, that the expenses and costs of
such actions, undertakings or proceedings shall be reimbursable to
the Trustee from the Income and Capital Accounts and the payment of
such amounts shall be secured by a prior lien on such Trust.
(e) (I) Subject to the provisions of subparagraphs (II) and
(III) of this paragraph, the Trustee may employ agents, sub-
custodians, attorneys, accountants and auditors and shall not be
answerable for the default or misconduct of any such agents, sub-
custodians, attorneys, accountants or auditors if such agents, sub-
custodians, attorneys, accountants or auditors shall have been
selected with reasonable care. The Trustee shall be fully protected
in respect of any action under this Indenture taken or suffered in
good faith by the Trustee in accordance with the opinion of counsel,
which may be counsel to the Depositor acceptable to the Trustee,
provided, however that this disclaimer of liability shall not
(i) excuse the Trustee from the responsibilities specified in
subparagraph II below or (ii) limit the obligation of the Trustee to
indemnify the Trust under subparagraph III below. The fees and
expenses charged by such agents, sub-custodians, attorneys,
accountants or auditors shall constitute an expense of the Trust
reimbursable from the Income and Capital Accounts of the affected
Trust as set forth in section 6.04 hereof.
(II) The Trustee may place and maintain in the care of an
eligible foreign custodian (which is employed by the Trustee as a
sub-custodian as contemplated by subparagraph (I) of this
paragraph (e) and which may be an affiliate or subsidiary of the
Trustee or any other entity in which the Trustee may have an
ownership interest) the Trust's foreign securities, cash and cash
equivalents in amounts reasonably necessary to effect the Trust's
foreign securities transactions, provided that:
(1) The Trustee shall have:
(i) determined that maintaining the Trust's assets
in a particular country or countries is consistent with
the best interests of the Trust and the Unitholders;
(ii) determined that maintaining the Trust's assets
with such eligible foreign custodian is consistent with
the best interests of the Trust and the Unitholders; and
(iii) entered into a written contract which is
consistent with the best interests of the Trust and the
Unitholders and which will govern the manner in which such
eligible foreign custodian will maintain the Trust's
assets and which provides that:
(A) The Trust will be adequately indemnified
and its assets adequately insured in the event of
loss (without regard to the indemnity provided by the
Trustee under Section III hereof);
(B) The Trust's assets will not be subject to
any right, charge, security interest, lien or claim
of any kind in favor of the eligible foreign
custodian or its creditors except a claim for payment
for their safe custody or administration;
(C) Beneficial ownership of the Trust's assets
will be freely transferable without the payment of
money or value other than for safe custody or
administration;
(D) Adequate records will be maintained
identifying the assets as belonging to the Trust;
(E) The Trust's independent public accountants
will be given access to records identifying assets of
the Trust or confirmation of the contents of those
records; and
(F) The Trustee will receive periodic reports
with respect to safekeeping of the Trust's assets,
including, but not necessarily limited to,
notification of any transfer to or from the Trustee's
account.
(2) The Trustee shall establish a system to monitor such
foreign custody arrangements to ensure compliance with the
conditions of this subparagraph.
(3) The Trustee, at least annually, shall review and
approve the continuing maintenance of Trust assets in a
particular country or countries with a particular eligible
foreign custodian or particular eligible foreign custodians as
consistent with the best interests of the Trust and the
Unitholders.
(4) The Trustee shall maintain and keep current written
records regarding the basis for the choice or continued use of
a particular eligible foreign custodian pursuant to this
subparagraph, and such records shall be available for
inspection by Unitholders and the Securities and Exchange
Commission at the Trustee's offices at all reasonable times
during its usual business hours.
(5) Where the Trustee has determined that a foreign
custodian may no longer be considered eligible under this
subparagraph or that, pursuant to clause (3) above, continuance
of the arrangement would not be consistent with the best
interests of the Trust and the Unitholders, the Trust must
withdraw its assets from the care of that custodian as soon as
reasonably practicable, and in any event within 180 days of the
date when the Trustee made the determination.
As used in this subparagraph (II),
(1) "foreign securities" include: securities issued
and sold primarily outside the United States by a foreign
government, a national of any foreign country or a corporation
or other organization incorporated or organized under the laws
of any foreign country and securities issued or guaranteed by
the government of the United States or by any state or any
political subdivision thereof or by any agency thereof or by
any entity organized under the laws of the United States or of
any state thereof which have been issued and sold primarily
outside the United States.
(2) "eligible foreign custodian" means:
(a) The following securities depositories and
clearing agencies which operate transnational systems for the
central handling of securities or equivalent book entries
which, by appropriate exemptive order issued by the Securities
and Exchange Commission, have been qualified as eligible
foreign custodians for the Trust but only for so long as such
exemptive order continues in effect: Morgan Guaranty Trust
Company of New York, Brussels, Belgium, in its capacity as
operator of the Euroclear System ("Euroclear"), and Central de
Livraison de Valeurs Mobilires, S.A. ("CEDEL").
(b) Any other entity that shall have been qualified
as an eligible foreign custodian for the foreign securities of
the Trust by the Securities and Exchange Commission by
exemptive order, rule or other appropriate action, commencing
on such date as it shall have been so qualified but only for so
long as such exemptive order, rule or other appropriate action
continues in effect.
The determinations set forth above to be made by the
Trustee should be made only after consideration of all matters
which the Trustee, in carrying out its fiduciary duties, finds
relevant, including, but not necessarily limited to,
consideration of the following:
1. With respect to the selection of the country
where the Trust's assets will be maintained, the Trustee should
consider:
a. Whether applicable foreign law would restrict
the access afforded the Trust's independent public accountants
to books and records kept by an eligible foreign custodian
located in that country;
b. Whether applicable foreign law would restrict
the Trust's ability to recover its assets in the event of the
bankruptcy of an eligible foreign custodian located in that
country;
c. Whether applicable foreign law would restrict
the Trust's ability to recover assets that are lost while under
the control of an eligible foreign custodian located in that
country;
d. The likelihood of expropriation,
nationalization, freezes, or confiscation of the Trust's
assets; and
e. Whether difficulties in converting the Trust's
cash and cash equivalents to U.S. dollars are reasonably
foreseeable.
2. With respect to the selection of an eligible
foreign custodian, the Trustee should consider:
a. The financial strength of the eligible foreign
custodian, its general reputation and standing in the country
in which it is located, its ability to provide efficiently the
custodial services required and the relative cost for those
services;
b. Whether the eligible foreign custodian would
provide a level of safeguards for maintaining the Trust's
assets not materially different from that provided by the
Trustee in maintaining the Trust's securities in the United
States;
c. Whether the eligible foreign custodian has
branch offices in the United States in order to facilitate the
assertion of jurisdiction over and enforcement of judgments
against such custodian; and
d. In the case of an eligible foreign custodian
that is a foreign securities depository, the number of
participants in, and operating history of, the depository.
3. The Trustee should consider the extent of the
Trust's exposure to loss because of the use of an eligible
foreign custodian. The potential effect of such exposure upon
Unitholders shall be disclosed, if material, by the Depositor
in the Prospectus relating to the Trust.
(III) The Trustee will indemnify and hold the Trust harmless
from and against any loss that shall occur as the result of the
failure of an eligible foreign custodian holding the foreign
securities of the Trust to exercise reasonable care with respect to
the safekeeping of such foreign securities to the same extent that
the Trustee would be required to indemnify and hold the Trust
harmless if the Trustee were holding such foreign securities in the
jurisdiction of the United States whose laws govern the indenture,
provided, however that the Trustee will not be liable for loss
except by reason of the gross negligence, bad faith or willful
misconduct of the Trustee or the eligible foreign custodian.
(f) If at any time the Depositor shall fail to undertake or
perform any of the duties which by the terms of this Indenture are
required by it to be undertaken or performed, or such Depositor
shall become incapable of acting or shall be adjudged a bankrupt or
insolvent, or a receiver of such Depositor or of its property shall
be appointed, or any public officer shall take charge or control of
such Depositor or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then in any such case,
the Trustee may: (1) appoint a successor depositor, which may be
the Trustee or an affiliate, who shall act hereunder in all respects
in place of such Depositor, which successor shall be satisfactory to
the Trustee, and which may be compensated at rates deemed by the
Trustee to be reasonable under the circumstances, by deduction
ratably from the Income Account of the affected Trusts or, to the
extent funds are not available in such Account, from the Capital
Account of the affected Trusts, but no such deduction shall be made
exceeding such reasonable amount as the Securities and Exchange
Commission may prescribe in accordance with Section 26(a)(2)(C) of
the Investment Company Act of 1940, or (2) terminate this Indenture
and the trust created hereby and liquidate the Trust in the manner
provided in Section 8.02.
(g) If (i) in the case of an Equity Trust the value of such
Trust as shown by any evaluation by the Trustee pursuant to
Section 5.01 hereof shall be less than that minimum termination
amount indicated in the Prospectus relating to such Trust or
(ii) by reason of the Depositor's redemption of Units of a
Trust not theretofore sold constituting more than 60% of the
number of Units initially authorized, the net worth of such Trust
is reduced to less than 40% of the aggregate value of Securities
deposited in such Trust at the termination of the initial offering
period, the Trustee may in its discretion, and shall when so
directed by the Depositor, terminate this Indenture and the trust
created hereby and liquidate such Trust, in such manner as the
Depositor shall direct.
(h) In no event shall the Trustee be liable for any taxes or
other governmental charges imposed upon or in respect of the
Securities or upon the income or interest thereon or upon it as
Trustee hereunder or upon or in respect of any Trust which it 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
the premises. For all such taxes and charges and for any expenses,
including counsel fees, which the Trustee may sustain or incur with
respect to such taxes or charges, the Trustee shall be reimbursed
and indemnified out of the Income and Capital Accounts of the
affected Trust, and the payment of such amounts so paid by the
Trustee shall be secured by a prior lien on such Trust.
(i) Except as provided herein, no payment to a Depositor or to
any principal underwriter (as defined in the Investment Company Act
of 1940) for any Trust or to any affiliated person (as so defined)
or agent of a Depositor or such underwriter shall be allowed the
Trustee as an expense except for payment of such reasonable amounts
as the Securities and Exchange Commission may prescribe as
compensation for performing bookkeeping and other administrative
services of a character normally performed by the Trustee.
(j) The Trustee, except by reason of its own negligence or
willful misconduct, shall not be liable for any action taken or
suffered to be taken by it in good faith and believed by it to be
authorized or within the discretion, rights or powers conferred upon
it by this Indenture.
(k) The Trustee in its individual or any other capacity may
become an owner or pledgee of, or be an underwriter or dealer in
respect of, obligations issued by the same issuer (or an affiliate
of such issuer) of any Securities at any time held as part of any
Trust and may deal in any manner with the same or with the issuer
(or an affiliate of the issuer) with the rights and powers as if it
were not the Trustee hereunder.
(1) Each Trust may include a Letter or Letters of Credit for
the purchase of Contract Securities issued by the Trustee in its
individual capacity for the account of the Depositor and the Trustee
may otherwise deal with the Depositor and each Trust with the same
rights and powers as if it were not the Trustee hereunder.
(m) The Trustee is authorized to appoint as co-trustee of any
Trust a trust company affiliated with the Trustee to perform the
functions of custodian and receiving and paying agent.
Notwithstanding any provision to the contrary in this Indenture, no
Zero Coupon Obligations may be sold to pay the fees and expenses of an
Equity and Treasury Trust, including, without limitation, fees and
expenses set forth in Section 8.02(a), (b) and (c).
Section 6.02. Books, Records and Reports. The Trustee shall keep
proper books of record and account of all the transactions of each Trust
under this Indenture at its corporate trust office, including a record of
the name and address of, and the Units issued by each Trust and held by,
every Unitholder, and such books and records of each Trust shall be open
to inspection by any Unitholder of such Trust 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 or rule or regulation thereunder.
Unless the Depositor determines that such an audit is not required,
the accounts of each Trust shall be audited not less than annually by
independent public accountants designated from time to time by the
Depositor and reports of such accountants shall be furnished by the
Trustee, upon request, to Unitholders. The Trustee, however, in
connection with any such audits shall not be obligated to use Trust
assets to pay for such audits in excess of the amounts indicated in the
Prospectus relating to such Trust.
To the extent permitted under the Investment Company Act of 1940 as
evidenced by an opinion of independent counsel to the Depositor
satisfactory to the Trustee or "no-action" letters issued by the staff of
the Securities and Exchange Commission, the Trustee shall pay, or
reimburse to the Depositor or others, from the Income or Capital Account
the costs of the preparation of documents and information with respect to
each Trust required by law or regulation in connection with the
maintenance of a secondary market in units of each Trust. Such costs may
include but are not limited to accounting and legal fees, blue sky
registration and filing fees, printing expenses and other reasonable
expenses related to documents required under federal and state securities
laws.
Section 6.03. Indenture and List of Securities on File. The Trustee
shall keep a certified copy or duplicate original of this Indenture on
file at its corporate trust office available for inspection at all
reasonable times during the usual business hours by any Unitholder,
together with a current list of the Securities in each Trust.
Section 6.04. Compensation. Subject to the provisions of Section 3.14
hereof, including the assumption of expenses therein with respect to an
Equity and Treasury Trust, the Trustee shall receive at the times set
forth in Section 3.05, as compensation for performing ordinary normal
recurring services under this Indenture, an amount calculated at the
annual compensation rate stated in the Prospectus and will be computed
based on the number of Units outstanding as of January 1 of such year
except for a Trust during the year or years in which an initial offering
period as determined in Section 4.01 of this Indenture occurs, in which
case the fee for a month is based on the number of Units outstanding at
the end of such month (such annual fee to be pro rated for any calendar
year in which the Trustee provides services during less than the whole of
such year). The Trustee shall charge a pro rated portion of its annual
fee at the times specified in Section 3.05, which pro rated portion shall
be calculated on the basis of the largest number of Units in such Trust
at any time during the period subsequent to the Initial Date of Deposit.
The Trustee may from time to time adjust its compensation as set forth
above, provided that total adjustment upward does not, at the time of
such adjustment, exceed the percentage of the total increase, after the
date hereof, in consumer prices for services as measured by the United
States Department of Labor Consumer Price Index entitled "All Services
Less Rent." The consent or concurrence of any Unitholder hereunder shall
not be required for any such adjustment or increase. Such compensation
shall be charged by the Trustee against the Income and Capital Accounts
of each Trust; provided, however, that such compensation shall be deemed
to provide only for the usual, normal and proper functions undertaken as
Trustee pursuant to this Indenture.
The Trustee shall charge the Income and Capital Accounts for any and
all expenses and disbursements incurred hereunder, including legal and
auditing expenses, and for any extraordinary services performed
hereunder, which extraordinary services shall include but not be limited
to all costs and expenses incurred by the Trustee in making any annual or
other reports or other documents referred to in Sections 6.01 and 6.02;
provided, however, that the amount of any such charge which has not been
finally determined as of any calculation time may be estimated and any
necessary adjustments shall be made. Provided, further, that if the
balances in the Income and Capital Accounts shall be insufficient to
provide for amounts payable pursuant to this Section 6.04, the Trustee
shall have the power to sell Securities in the manner provided in
Section 5.02; provided, however, that no Zero Coupon Obligations may be
sold to pay any fees or expenses of an Equity and Treasury Trust. If
other Securities are not available in an Equity and Treasury Trust's
Accounts to sell for such purpose, then such fees and expenses shall be
paid in accordance with Section 3.14 hereof. The Trustee shall not be
liable or responsible in any way for depreciation or loss incurred by
reason of any such sale.
The Trustee shall be indemnified ratably by the affected Trust and
held harmless against any loss or liability accruing to it without
negligence, bad faith or willful misconduct on its part, arising out of
or in connection with the acceptance or administration of this Fund,
including the costs and expenses (including counsel fees) of defending
itself against any claim of liability in the premises, including any
loss, liability or expense incurred in acting pursuant to written
directions to the Trustee given by the Depositor from time to time in
accordance with the provisions of this Indenture or in undertaking
actions from time to time which the Trustee deems necessary in its
discretion to protect the Fund and the rights and interests of the
Unitholders pursuant to the terms of this Indenture. Any moneys payable
to the Trustee under this Section 6.04 shall be secured by a lien on the
Trust prior to the interest of Unitholders.
'Section 6.05. Removal and Resignation of Trustee; Successor'. The
following provisions shall provide for the removal and resignation of the
Trustee and the appointment of any successor trustee:
(a) The Trustee or any trustee or trustees hereafter appointed
may resign and be discharged of the Trusts created by this
Indenture, by executing an instrument in writing resigning as
Trustee of such Trusts and filing same with the Depositor and
mailing a copy of a notice of resignation to all Unitholders then of
record, not less than 60 days before the date specified in such
instrument when, subject to Section 6.05(e), such resignation is to
take effect. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor trustee as hereinafter
provided, by written instrument, in duplicate, one copy of which
shall be delivered to the resigning Trustee and one copy to the
successor trustee. The Depositor may at any time remove the
Trustee, with or without cause, and appoint a successor trustee by
written instrument, in duplicate, one copy of which shall be
delivered to the Trustee so removed and one copy to the successor
trustee. Notice of such resignation or removal of a trustee and
appointment of a successor trustee shall be mailed by the successor
trustee, promptly after its acceptance of such appointment, to each
Unitholder then of record.
(b) Any successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor and to the resigning or
removed Trustee an instrument accepting such appointment hereunder,
and such successor trustee without any further act, deed or
conveyance shall become vested with all the rights, powers and
duties and obligations of its predecessor hereunder with like effect
as if originally named Trustee herein and shall be bound by all the
terms and conditions of this Indenture. Upon the request of such
successor trustee, the Depositor and the resigning or removed
Trustee shall, upon payment of any amounts due the resigning or
removed Trustee, or provision therefor to the satisfaction of such
resigning or removed Trustee, execute and deliver an instrument
acknowledged by it transferring to such successor trustee all the
rights and powers of the resigning or removed Trustee; and the
resigning or removed Trustee shall transfer, deliver and pay over to
the successor trustee all Securities and moneys at the time held by
it hereunder, together with all necessary instruments of transfer
and assignment or other documents properly executed necessary to
effect such transfer and such of the records or copies thereof
maintained by the resigning or removed Trustee in the administration
hereof as may be requested by the successor trustee, and shall
thereupon be discharged from all duties and responsibilities under
this Indenture.
(c) In case at any time the Trustee shall resign and no
successor trustee shall have been appointed and have accepted
appointment within 30 days after notice of resignation has been
received by the Depositor, the retiring Trustee may forthwith apply
to a court of competent jurisdiction for the appointment of a
successor trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, appoint a successor
trustee.
(d) Any corporation into which any trustee hereunder may be
merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which any trustee
hereunder shall be a party, shall be the successor trustee under
this Indenture without the execution or filing of any paper,
instrument or further act to be done on the part of the parties
hereto, anything herein, or in any agreement relating to such merger
or consolidation, by which any such trustee may seek to retain
certain powers, rights and privileges theretofore obtaining for any
period of time following such merger or consolidation, to the
contrary notwithstanding.
(e) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to this Section shall become
effective upon acceptance of appointment by the successor trustee as
provided in subsection (b) hereof.
Section 6.06. Qualifications of Trustee. The Trustee shall be a
corporation organized and doing business under the laws of the United
States or any state thereof, which is authorized under such laws to
exercise corporate trust powers and having at all times aggregate
capital, surplus and undivided profits of not less than $5,000,000.
Article VII Rights of Unitholders Article VII
Rights of Unitholders
Section 7.01. Beneficiaries of Trust. By the purchase and acceptance
or other lawful delivery and acceptance of any Unit, whether certificated
or not, the Unitholder shall be deemed to be a beneficiary of such Trust
created by this Indenture and vested with all right, title and interest
in such Trust to the extent of the Unit or Units set forth and whether
evidenced by such Certificate or held in uncertificated form, subject to
the terms and conditions of this Indenture.
Section 7.02. Rights, Terms and Conditions. In addition to the other
rights and powers set forth in the other provisions and conditions of
this Indenture, the Unitholders shall have the following rights and
powers and shall be subject to the following terms and conditions:
(a) A Unitholder may at any time prior to the Trustee's close
of business as of the date on which the Trust is terminated tender
his Units or his Certificate(s) if held in certificated form
(including any temporary Certificate or other evidence of ownership
of Units of such Trust, issued by the Trustee or the Depositor) to
the Trustee for redemption, subject to and in accordance with
Section 5.02.
(b) The death or incapacity of any Unitholder shall not
operate to terminate this Indenture or a related Trust, nor entitle
his legal representatives or heirs to claim an accounting or to take
any action or proceeding in any court of competent jurisdiction for
a partition or winding up of the Fund or a related Trust, nor
otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them. Each Unitholder expressly waives any
right he may have under any rule of law, of the provisions of any
statute, or otherwise, to require the Trustee at any time to
account, in any manner other than as expressly provided in this
Indenture, in respect of the Securities or moneys from time to time
received, held and applied by the Trustee hereunder.
(c) No Unitholder shall have any right to vote or in any
manner otherwise control the operation and management of the Fund, a
related Trust, or the obligations and management of the Trust, or
the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Certificates which may have
been issued, be construed so as to constitute the Unitholders from
time to time as partners or members of an association; nor shall any
Unitholder ever be under any liability to any third persons by
reason of any action taken by the parties to this Indenture, or any
other cause whatsoever.
'Article VIII Additional Covenants Miscellaneous Provisions';Article
VIII
Additional Covenants; Miscellaneous Provisions
Section 8.01. Amendments. (a) This Indenture may be amended from time
to time by the Depositor and Trustee hereto or their respective
successors, without the consent of any of the Unitholders (i) to cure any
ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision contained
herein, (ii) to make such other provision regarding matters or questions
arising hereunder as shall not adversely affect the interests of the
Unitholders or (iii) to make such amendments as may be necessary (a) for
the Trust to continue to qualify as a regulated investment company for
federal income tax purposes if the Trust has elected to be taxed as such
under the United States Internal Revenue Code of 1986, as amended, or (b)
to prevent the Trust from being deemed an association taxable as a
corporation for federal income tax purposes if the Trust has not elected
to be taxed as a regulated investment company under the United States
Internal Revenue Code of 1986, as amended. This Indenture may not be
amended, however, without the consent of all Unitholders then
outstanding, so as (1) to permit, except in accordance with the terms and
conditions hereof, the acquisition hereunder of any Securities other than
those specified in the Schedules to the Trust Agreement or (2) to reduce
the aforesaid percentage of Units the holders of which are required to
consent to certain of such amendments. This Indenture may not be amended
so as to reduce the interest in a Trust represented by Units (whether
evidenced by Certificates or held in uncertificated form) without the
consent of all affected Unitholders.
(b) Except for the amendments, changes or modification as provided
in Section 8.01(a) hereof, neither the parties hereto nor their
respective successors shall consent to any other amendment, change or
modification of this Indenture without the giving of notice and the
obtaining of the approval or consent of Unitholders representing at least
51% of the Units then outstanding of the affected Trust. Nothing
contained in this Section 8.01(b) shall permit, or be construed as
permitting, a reduction of the aggregate percentage of Units the holders
of which are required to consent to any amendment, change or modification
of this Indenture without the consent of the Unitholders of all of the
Units then outstanding of the affected Trust and in no event may any
amendment be made which would (1) alter the rights to the Unitholders as
against each other, (2) provide the Trustee with the power to engage in
business or investment activities other than as specifically provided in
this Indenture or (3) adversely affect the tax status of the Trust for
federal income tax purposes.
(c) Promptly after the execution of any such amendment the Trustee
shall furnish written notification to all then outstanding Unitholders of
the substance of such amendment.
Section 8.02. Termination. This Indenture and each Trust created
hereby shall terminate upon the maturity, redemption, sale or other
disposition as the case may be of the last Security held in such Trust
hereunder unless sooner terminated as hereinbefore specified, and may be
terminated at any time by the written consent of Unitholders representing
at least 66 2/3% of the Units of the Trust then outstanding; provided
that in no event shall any Trust continue beyond the Mandatory
Termination Date. Upon the date of termination the registration books of
the Trustee shall be closed.
In the event of a termination, the Trustee shall proceed to
liquidate the Securities then held and make the payments and
distributions provided for hereinafter in this Section 8.02 based on such
Unitholder's pro rata interest in the balance of the Capital and Income
Accounts after the deductions herein provided. Written notice shall be
given by the Trustee in connection with any termination to each
Unitholder at his address appearing on the registration books of the
Trustee and in connection with a Mandatory Termination Date such notice
shall be given no later than 30 days before the Mandatory Termination
Date. Included with such notice shall be a form to enable Unitholders
owning that number of Units referred to in the Prospectus to request an
In Kind Distribution rather than payment totally in cash upon
termination. Such request must be returned to the Trustee at least five
Business Days prior to the Mandatory Termination Date. Unitholders who
do not effectively request an In Kind Distribution shall receive their
distribution upon termination in cash.
In connection with any such termination, the Trustee shall segregate
(i) such number of Equity Securities as the Trustee, in its
sole discretion, determines shall be necessary to liquidate to
provide for fees and expenses of such Trust and
(ii) such number of the remaining Equity Securities as shall be
necessary to satisfy distributions to Unitholders electing an In
Kind Distribution.
The Trustee will liquidate the Zero Coupon Obligations then held, if
any, and the Equity Securities not segregated for In Kind Distributions
during such period and in such daily amounts as the Depositor shall
direct. The Depositor shall direct the liquidation of the Equity
Securities in such manner as to effectuate orderly sales and a minimal
market impact. In the event the Depositor 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. The Trustee shall
not be liable for or responsible in any way for depreciation or loss
incurred by reason of any sale or sales made in accordance with the
Depositor's direction or, in the absence of such direction, in the
exercise of the discretion granted by this Section 8.02. The Trustee
shall deduct from the proceeds of these sales and pay any tax or
governmental charges and any brokerage commissions in connection with
such sales. Amounts received by the Trustee representing the proceeds
from the sales of Securities shall be credited to the related Capital
Account.
On the fifth Business Day following receipt of all proceeds of sale
of the Securities, the Trustee shall:
(a) deduct from the Income Account of such Trust or, to the
extent that funds are not available in such Account of such Trust,
from the Capital Account of such Trust, and pay to itself
individually an amount equal to the sum of (i) its accrued
compensation for its ordinary recurring services, (ii) any
compensation due it for its extraordinary services in connection
with such Trust, and (iii) any costs, expenses or indemnities in
connection with such Trust as provided herein;
(b) deduct from the Income Account of such Trust or, to the
extent that funds are not available in such Account, from the
Capital Account of such Trust, and pay accrued and unpaid fees of
the Evaluator, the Supervisory Servicer and counsel in connection
with such Trust, if any;
(c) deduct from the Income Account of such Trust or the
Capital Account of such Trust any amounts which may be required to
be deposited in the Reserve Account to provide for payment of any
applicable taxes or other governmental charges and any other amounts
which may be required to meet expenses incurred under this Indenture
in connection with such Trust;
(d) make final distributions from such Trust, against
surrender for cancellation of all of each Unitholder's Certificate
or Certificates, if issued, as follows:
(i) to each Unitholder requesting an In Kind Distribution
(y) such holder's pro rata portion of each of the Equity
Securities segregated for distribution in kind, in whole
shares, and (z) cash equal to such Unitholder's pro rata
portion of the Income and Capital Accounts as follows: (1) a
pro rata portion of the net proceeds of sale of the Equity
Securities representing any fractional shares included in such
Unitholder's pro rata share of the Equity Securities not
segregated for liquidation to provide for Trust expenses, (2)
cash equal to such Unitholder's pro rata share of the net
proceeds of liquidation of the Zero Coupon Securities, if any,
and (3) cash equal to such Unitholder's pro rata share of the
sum of the cash balances of the Income and Capital Accounts as
of the Treasury Obligations Maturity Date in the case of an
Equity and Treasury Trust and as of the Mandatory Termination
Date in the case of an Equity Trust plus, in either case, the
net proceeds of sale of the Equity Securities segregated for
liquidation to provide for Trust expenses less deduction of the
fees and expenses specified in this Section 8.02 and less
deduction of the Trustee's cost of registration and delivery of
such Unitholder's Equity Securities;
(ii) to each Unitholder receiving distribution in cash,
such holder's pro rata share of the cash balances of the Income
and Capital Accounts; and
(iii) on the conditions set forth in Section 3.04 hereof,
to all Unitholders, their pro rata share of the balance of the
Reserve Account.
In Kind Distributions of Equity Securities shall be made by the
Trustee through the distribution of each of the Equity Securities in
book-entry form to the account of the Unitholder's bank or broker-
dealer at the Depository Trust Company; and
(e) within 60 days after the distribution to each Unitholder
as provided for in (d), furnish to each such Unitholder a final
distribution statement, setting forth the data and information in
substantially the form and manner provided for in Section 3.06
hereof.
The Trustee shall be under no liability with respect to moneys held
by it in the Income, Reserve and Capital Accounts of a Trust upon
termination except to hold the same in trust within the meaning of the
Investment Company Act of 1940, without interest until disposed of in
accordance with the terms of this Indenture.
Section 8.03. Construction. This Indenture is executed and delivered
in the state of New York, and all laws or rules of construction of such
state shall govern the rights of the parties hereto and the Unitholders
and the interpretation of the provisions hereof.
Section 8.04. Registration of Units. Except as provided herein, the
Depositor agrees and undertakes on its own part to register the Units
with the Securities and Exchange Commission or other applicable
governmental agency, federal or state, pursuant to applicable federal or
state statutes, if such registration shall be required, and to do all
things that may be necessary or required to comply with this provision
during the term of the Trust created hereunder, and the Trustee shall
incur no liability or be under any obligation or expenses in connection
therewith.
Section 8.05. Written Notice. Any notice, demand, direction or
instruction to be given to the Depositor hereunder shall be in writing
and shall be duly given if mailed or delivered to the Depositor, One
Parkview Plaza, Oakbrook Terrace, Illinois 60181, or at such other
address as shall be specified by the Depositor to the other parties
hereto in writing.
Any notice, demand, direction or instruction to be given to the
Trustee shall be in writing and shall be duly given if delivered to the
corporate trust office of the Trustee at 101 Barclay Street, 17th Floor,
New York, New York 10286, Attention: Unit Trust Division, or to such
other address as shall be specified by the Trustee to the other parties
in writing.
Any notice, demand, direction or instruction to be given to the
Evaluator hereunder shall be in writing and shall be duly given if mailed
or delivered to the Evaluator at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181, or at such other address as shall be specified by the
Evaluator to the other parties hereto in writing.
Any notice, demand, direction or instruction to be given to the
Supervisory Servicer shall be in writing and shall be duly given if
mailed or delivered to the Supervisory Servicer at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181 or at such other address as shall be
specified by the Supervisory Servicer to the other parties in writing.
Any notice to be given to the Unitholders shall be duly given if
mailed by first class mail with postage prepaid or delivered to each
Unitholder at the address of such holder appearing on the registration
books of the Trustee.
Section 8.06. Severability. If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be held contrary
to any express provision of law or contrary to policy of express law,
though not expressly prohibited, or against public policy, or shall for
any reason whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Indenture and shall in
no way affect the validity or enforceability of the other provisions of
this Indenture or of the Certificates or the rights of the holders
thereof.
Section 8.07. Dissolution of Depositor Not to Terminate. The
dissolution of the Depositor for any cause whatsoever shall not operate
to terminate this Indenture or any Trust insofar as the duties and
obligations of the Trustee are concerned.
In Witness Whereof, the parties hereto have each caused these
Standard Terms and Conditions of Trust to be executed by authorized
officers; all as of the day, month and year first above written.
Van Kampen American Capital
Distributors, Inc., Depositor
By Vice President
American Portfolio Evaluation
Services (a division of Van Kampen
American Capital Investment Advisory
Corp.), Evaluator
By Vice President
Van Kampen American Capital
Investment Advisory Corp.,
Supervisory Servicer
By Vice President
The Bank of New York, Trustee
By Vice President
Exhibit 3.1
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
January 27, 1998
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: Van Kampen American Capital Equity Opportunity Trust, Series 87
Gentlemen:
We have served as counsel for Van Kampen American Capital
Distributors, Inc. as Sponsor and Depositor of Van Kampen American
Capital Equity Opportunity Trust, Series 87 (hereinafter referred to as
the "Trust"), in connection with the preparation, execution and delivery
of a Trust Agreement dated January 27 1998, among Van Kampen American
Capital Distributors, Inc., as Depositor, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., as Evaluator, Van Kampen American Capital Investment Advisory
Corp., as Supervisory Servicer, and The Bank of New York, as Trustee,
pursuant to which the Depositor has delivered to and deposited the
Securities listed in the Schedule to the Trust Agreement with the Trustee
and pursuant to which the Trustee has provided to or on the order of the
Depositor documentation evidencing ownership of Units of fractional
undivided interest in and ownership of the Trust (hereinafter referred to
as the "Units"), created under said Trust Agreement.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to
enable us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and
the execution and issuance of certificates evidencing the Units
in the Trust have been duly authorized; and
2. The certificates evidencing the Units in the Trust,
when duly executed and delivered by the Depositor and the
Trustee in accordance with the aforementioned Trust Agreement,
will constitute valid and binding obligations of such Trust and
the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-44581) relating to the Units
referred to above and to the use of our name and to the reference to our
firm in said Registration Statement and in the related Prospectus.
Respectfully submitted,
Chapman and Cutler
MJK/slm
Exhibit 3.2
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
January 27, 1998
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Van Kampen American Capital Equity Opportunity Trust, Series 87
Gentlemen:
We have acted as counsel for Van Kampen American Capital
Distributors, Inc., Depositor of Van Kampen American Capital Equity
Opportunity Trust, Series 87 (the "Fund"), in connection with the
issuance of Units of fractional undivided interest in the Fund, under a
Trust Agreement dated January 27, 1998 (the "Indenture") among Van
Kampen American Capital Distributors, Inc., as Depositor, Van Kampen
American Capital Investment Advisory Corp., as Evaluator, Van Kampen
American Capital Investment Advisory Corp., as Supervisory Servicer, and
The Bank of New York, as Trustee. The Fund is comprised of two unit
investment trusts, Small-Cap Growth Trust, Series 1 and Mid-Cap Growth
Trust, Series 1 (each a "Trust").
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we
have deemed pertinent.
The assets of the Trust will consist of a portfolio of equity
securities (the "Securities") as set forth in the Prospectus. For the
purposes of the following discussion and opinion, it is assumed that each
Security is equity for federal income tax purposes.
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable, we are of the opinion that, under
existing United States Federal income tax law:
(i) The Trust is not an association taxable as a
corporation for Federal income tax purposes but will be
governed by the provisions of subchapter J (relating to trusts)
of chapter 1, Internal Revenue Code of 1986 (the "Code").
(ii) A Unitholder will be considered as owning a pro rata
share of each asset of the Trust in the proportion that the
number of Units held by him bears to the total number of Units
outstanding. Under subpart E, subchapter J of chapter 1 of the
Code, income of the Trust will be treated as income of each
Unitholder in the proportion described, and an item of Trust
income will have the same character in the hands of a
Unitholder as it would have in the hands of the Trustee. Each
Unitholder will be considered to have received his pro rata
share of income derived from each Trust asset when such income
is considered to be received by the Trust. A Unitholder's pro
rata portion of distributions of cash or property by a
corporation with respect to a Security ("dividends" as defined
by Section 316 of the Code ) 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 which exceed such current and accumulated earnings
and profits will first reduce the Unitholder's tax basis in
such Security, and to the extent that such dividends exceed a
Unitholder's tax basis in such Security, shall be treated as
gain from the sale or exchange of property.
(iii) 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 closest to
the date the Unitholder purchases his Units), in order to
determine his tax basis for his pro rata portion of each
Security held by the Trust.
(iv) Gain or loss will be recognized to a Unitholder
(subject to various nonrecognition provisions under the Code)
upon redemption or sale of his Units, except to the extent an
in kind distribution of stock is received by such Unitholder
from the Trust as discussed below. Such gain or loss is
measured by comparing the proceeds of such redemption or sale
with the adjusted basis of his Units. Before adjustment, such
basis would normally be cost if the Unitholder had acquired his
Units by purchase. Such basis will be reduced, but not below
zero, by the Unitholder's pro rata portion of dividends with
respect to each Security which are not taxable as ordinary
income.
(v) If the Trustee disposes of a Trust asset (whether by
sale, exchange, liquidation, redemption, payment on maturity or
otherwise) gain or loss will be recognized to the Unitholder
(subject to various nonrecognition provisions under the Code)
and the amount thereof will be measured by comparing the
Unitholder's aliquot share of the total proceeds from the
transaction with his basis for his fractional interest in the
asset disposed of. Such basis is ascertained by apportioning
the tax basis for his Units (as of the date on which his Units
were acquired) among each of the Trust assets (as of the date
on which his Units were acquired) ratably according to their
values as of the valuation date nearest the date on which he
purchased such Units. A Unitholder's basis in his Units and of
his fractional interest in each Trust asset must be reduced,
but not below zero, by the Unitholder's pro rata portion of
dividends with respect to each Security which are not taxable
as ordinary income.
(vi) Under the Indenture, under certain circumstances, a
Unitholder tendering Units for redemption may request an in
kind distribution of Securities upon the redemption of Units or
upon the termination of the Trust. As previously discussed,
prior to the redemption of Units or the termination of the
Trust, a Unitholder is considered as owning a pro rata portion
of each of the Trust's assets. The receipt of an in kind
distribution will result in a Unitholder receiving an undivided
interest in whole shares of stock and possibly cash. The
potential federal income tax consequences which may occur under
an in kind distribution with respect to each Security owned by
the Trust will depend upon whether or not a Unitholder receives
cash in addition to Securities. A "Security" for this purpose
is a particular class of stock issued by a particular
corporation. A Unitholder will not recognize gain or loss if a
Unitholder only receives Securities in exchange for his or her
pro rata portion in the Securities held by the Trust. However,
if a Unitholder also receives cash in exchange for a fractional
share of a Security held by the Trust, such Unitholder will
generally recognize gain or loss based upon the difference
between the amount of cash received by the Unitholder and his
tax basis in such fractional share of a Security held by the
Trust. The total amount of taxable gains (or losses)
recognized upon such redemption will generally equal the sum of
the gain (or loss) recognized under the rules described above
by the redeeming Unitholder with respect to each Security owned
by the Trust.
A domestic corporation owning Units in the Trust may be eligible for
the 70% dividends received deduction pursuant to Section 243(a) of the
Code 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 and are attributable to domestic corporations), subject
to the limitations imposed by Sections 246 and 246A of the Code.
Section 67 of the Code provides that certain itemized deductions,
such as investment expenses, tax return preparation fees and employee
business expenses will be deductible by individuals 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.
A Unitholder will recognize taxable gain (or loss) when all or part
of his pro rata interest in a Security is either sold by the Trust or
redeemed or when a Unitholder disposes of his Units in a taxable
transaction, in each case for an amount greater (or less) than his tax
basis therefor, subject to various non-recognition provisions of the
Code.
Any gain recognized on a sale or exchange will, under current law,
generally be capital gain or loss.
The scope of this opinion is expressly limited to the matters set
forth herein, and, except as expressly set forth above, we express no
opinion with respect to any other taxes, including foreign, state or
local taxes or collateral tax consequences with respect to the purchase,
ownership and disposition of Units.
Very truly yours,
Chapman and Cutler
MJK/slm
Exhibit 3.3
Winston & Strawn
200 Park Avenue
New York, New York 10166-4193
January 27, 1998
Van Kampen American Capital Equity
Opportunity Trust, Series 87
c/o The Bank of New York, As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Van Kampen American Capital
Equity Opportunity Trust, Series 87 (the "Fund") consisting of Small-Cap
Growth Trust, Series 1 and Mid-Cap Growth Trust, Series 1 (individually a
"Trust" and, in the aggregate, the "Trusts") for purposes of determining
the applicability of certain New York taxes under the circumstances
hereinafter described.
The Fund is created pursuant to a Trust Agreement (the "Indenture"),
dated as of today (the "Date of Deposit") among Van Kampen American
Capital Distributors, Inc. (the "Depositor"), American Portfolio
Evaluation Services, a division of an affiliate of the Depositor, as
Evaluator, Van Kampen American Capital Investment Advisory Corp., an
affiliate of the Depositor, as Supervisory Servicer (the "Supervisory
Servicer"), and The Bank of New York, as trustee (the "Trustee"). As
described in the prospectus relating to the Fund dated today to be filed
as an amendment to a registration statement heretofore filed with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Prospectus") (File Number 333-44581), the objectives of the
Fund are to provide the potential for dividend income and capital
appreciation through investment in a fixed portfolio of actively traded
equity securities of companies engaged in, providing services to
companies in, the industry identified in Trust's name, or are the type of
securities identified in the name of the Trust. It is noted that no
opinion is expressed herein with regard to the Federal tax aspects of the
securities, the Trusts, units of the Trusts (the "Units"), or any income,
gains or losses in respect thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee
with respect to the Trust the securities and/or contracts and cash for
the purchase thereof together with an irrevocable letter of credit in the
amount required for the purchase price of the securities comprising the
corpus of the Trust as more fully set forth in the Prospectus.
The Trustee did not participate in the selection of the securities
to be deposited in the Trust, and, upon the receipt thereof, will deliver
to the Depositor a registered certificate for the number of Units
representing the entire capital of the Trusts as more fully set forth in
the Prospectus. The Units, which are represented by certificates
("Certificates"), will be offered to the public upon the effectiveness of
the registration statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with cash
dividends received by the Fund and with the proceeds from the disposition
of securities held in the Fund and the proceeds of the treasury
obligation on maturity and the distribution of such cash dividends and
proceeds to the Unit holders. The Trustee will also maintain records of
the registered holders of Certificates representing an interest in the
Fund and administer the redemption of Units by such Certificate holders
and may perform certain administrative functions with respect to an
automatic reinvestment option.
Generally, equity securities held in the Trust may be removed
therefrom by the Trustee at the direction of the Depositor upon the
occurrence of certain specified events which adversely affect the sound
investment character of the Fund, such as default by the issuer in
payment of declared dividends or of interest or principal on one or more
of its debt obligations.
Prior to the termination of the Fund, the Trustee is empowered to
sell equity securities designated by the Supervisory Servicer only for
the purpose of redeeming Units tendered to it and of paying expenses for
which funds are not available. The Trustee does not have the power to
vary the investment of any Unit holder in the Fund, and under no
circumstances may the proceeds of sale of any equity securities held by
the Fund be used to purchase new equity securities to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on
business corporations, and, for purposes of that Article, Section 208(l)
defines the term "corporation" to include, among other things, "any
business conducted by a trustee or trustees wherein interest or ownership
is evidenced by certificate or other written instrument."
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in
which interest or ownership is evidenced by
certificate or other written instrument includes, but
is not limited to, an association commonly referred
to as a "business trust" or "Massachusetts trust".
In determining whether a trustee or trustees are
conducting a business, the form of the agreement is
of significance but is not controlling. The actual
activities of the trustee or trustees, not their
purposes and powers, will be regarded as decisive
factors in determining whether a trust is subject to
tax under Article 9-A. The mere investment of funds
and the collection of income therefrom, with
incidental replacement of securities and reinvestment
of funds, does not constitute the conduct of a
business in the case of a business conducted by a
trustee or trustees. 20 NYCRR 1-2.5(b)(2) (July 11,
1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that
where a trustee merely invests funds and collects and distributes the
income therefrom, the trust is not engaged in business and is not subject
to the franchise tax. Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171
(3rd Dept. 1948), order resettled, 274 A.D. 1083, 85 N.Y.S.2d 705 (3rd
Dept. 1949).
In an Opinion of the Attorney General of the State of New York,
47 N.Y. Att'y. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the
trustee of an unincorporated investment trust was without authority to
reinvest amounts received upon the sales of securities and could dispose
of securities making up the trust only upon the happening of certain
specified events or the existence of certain specified conditions, the
trust was not subject to the franchise tax.
In the instant situation, the Trustee is not empowered to, and we
assume will not, sell equity securities contained in the corpus of the
Fund and reinvest the proceeds therefrom. Further, the power to sell
such equity securities is limited to circumstances in which the credit-
worthiness or soundness of the issuer of such equity security is in
question or in which cash is needed to pay redeeming Unit holders or to
pay expenses, or where the Fund is liquidated subsequent to the
termination of the Indenture. In substance, the Trustee will merely
collect and distribute income and will not reinvest any income or
proceeds, and the Trustee has no power to vary the investment of any Unit
holder in the Fund.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust
will be deemed to be the owner of the trust under certain circumstances,
and therefore taxable on his proportionate interest in the income
thereof. Where this Federal tax rule applies, the income attributed to
the grantor will also be income to him for New York income tax purposes.
See TSB-M-78(9)(c), New York Department of Taxation and Finance, June 23,
1978.
By letter dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder will be
considered as owning a share of each asset of the Trust in the proportion
that the number of Units held by such holder bears to the total number of
Units outstanding and the income of a Trust will be treated as the income
of each Unit holder in said proportion pursuant to Subpart E of Part I,
Subchapter J of Chapter 1 of the Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we
specifically rely, we are of the opinion that under existing laws,
rulings, and court decisions interpreting the laws of the State and City
of New York:
1. Each of the Trusts will not constitute an association
taxable as a corporation under New York law, and, accordingly, will
not be subject to tax on its income under the New York State
franchise tax or the New York City general corporation tax.
2. The income of the Trusts will be treated as the income of
the Unit holders under the income tax laws of the State and City of
New York.
3. Unit holders who are not residents of the State of New
York are not subject to the income tax laws thereof with respect to
any interest or gain derived from the Fund or any gain from the sale
or other disposition of the Units, except to the extent that such
interest or gain is from property employed in a business, trade,
profession or occupation carried on in the State of New York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name
and the reference to our firm in the Registration Statement and in the
Prospectus.
Very truly yours,
Winston & Strawn
MNS:
Exhibit 4.1
Interactive Data
14 Wall Street, 11th Floor
New York, NY 10005
January 26, 1998
Van Kampen American Capital
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital
Small-Cap Growth Trust, Series 1,
Mid-Cap Growth Trust, Series 1
(A Unit Investment Trust) Registered Under the Securities
Act of 1933, File No. 333-44581
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund, a copy of which is attached hereto.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Corporation, as
the Evaluator, and to the use of the Obligations prepared by us which are
referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Exhibit 4.2
Independent Certified Public Accountants' Consent
We have issued our report dated January 27, 1998 on the statements
of condition and related securities portfolios of Van Kampen American
Capital Equity Opportunity Trust, Series 87 as of January 27, 1998
contained in the Registration Statement on Form S-6 and Prospectus. We
consent to the use of our report in the Registration Statement and
Prospectus and to the use of our name as it appears under the caption
"Other Matters-Independent Certified Public Accountants."
Grant Thornton LLP
Chicago, Illinois
January 27, 1998
Exhibit 7.1
This Power of Attorney is applicable only to registration statements,
amendments to registration statements, applications for registration,
applications for exemptive relief and similar or related documents
pertaining to any series of Insured Municipals Income Trust; Investors'
Quality Tax-Exempt Trust, Multi-Series; Insured Municipals Income Trust,
Insured Multi-Series; Insured Municipals Income Trust and Investors'
Quality Tax-Exempt Trust, Multi-Series; Insured Tax-Free Bond Trust;
Insured Tax-Free Bond Trust, Insured Multi-Series; Investors' Corporate-
Income Trust; Investors' Governmental Securities-Income Trust;
International Bond Income Trust; Van Kampen Merritt Utility Income Trust;
Van Kampen American Capital Utility Income Trust; Van Kampen Merritt
Insured Income Trust; Van Kampen American Capital Insured Income Trust; Van
Kampen Merritt Equity Opportunity Trust; Van Kampen American Capital Equity
Opportunity Trust; Van Kampen Merritt Emerging Markets Income Trust; Van
Kampen American Capital Emerging Markets Income Trust; and any unit
investment trust sponsored by Van Kampen American Capital Distributors,
Inc. and any predecessors, affiliates or successors thereof whether or not
in existence at the date hereof.
Power of Attorney
Know All Men By These Presents, that the undersigned, director or
officer of Van Kampen American Capital Distributors, Inc., a Delaware
corporation, hereby constitutes and appoints James J. Boyne, Gina Costello,
Scott E. Martin, Charles G. Millington, Ronald A. Nyberg and William R.
Rybak, and each of them (with full power to each of them to act along)
his/her true and lawful attorney-in-fact and agent, for him/her and on
his/her behalf and in his/her name, place and stead, in any and all
capacities, to sign, execute and affix his/her seal thereto and file one or
more Registration Statements on Form S-6 under the Securities Act of 1933,
including any amendment or amendments thereto, with all exhibits, and any
and all other documents required to be filed and any and all applications
for exemptive relief with respect to any series of any unit investment
trust sponsored Van Kampen American Capital Distributors, Inc. and any
predecessors, affiliates or successors thereof whether or not in existence
at the date hereof and which may be created after the date hereof with any
regulatory authority, federal or state, relating to the registration
thereof, the issuance of units of fractional undivided interests therein or
any application for exemptive relief relating thereto, without limitation,
granting unto said attorneys, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in and about the premises in order to effectuate the same as fully to
all intents and purposes as he might or could do if personally present,
hereby ratifying and confirming all that said attorneys-in-fact and agents,
or any of them, may lawfully do or cause to be done by virtue hereof.
Signed this 23rd day of January, 1998.
JOHN H. ZIMMERMAN
John H. Zimmerman III
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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This report reflects the current time period taken from 487 on January 27, 1998
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This report reflects the current time period taken from 487 on January 27, 1998
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