MEMORANDUM OF CHANGES
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 89
The Prospectus filed with Amendment No. 2 of the Registration Statement
on Form S-6 has been revised to reflect information regarding the deposit of Van
Kampen American Capital Equity Opportunity Trust, Series 89 on June 8, 1998. An
effort has been made to set forth below each of the major changes from the
material previously submitted and also to reflect the same by blacklining the
marked counterparts of the Prospectus submitted with the Amendment. The changes
made in response to specific comments of the staff of the Securities and
Exchange Commission are set forth in the cover letter to this Registration
Statement.
Cover Page. The date of the Prospectus has been completed.
Pages 2-3. The "Summary of Essential Financial Information" and "Fee
Table" have been completed.
Pages 4-16. The portfolios and the notes thereto have been completed.
Pages 17-20. The description of the portfolio securities have been
completed.
Pages 21-23. The Report of Independent Certified Public Accountants
and Statements of Condition have been completed.
<PAGE>
FILE NO. 333-49361
CIK #1025235
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
Amendment No. 2
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: VAN KAMPEN AMERICAN CAPITAL EQUITY
OPPORTUNITY TRUST, SERIES 89
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 undivided beneficial interest
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE
REGISTRATION STATEMENT
/ / Check box if it is proposed that this filing will become effective
- ---- at ____________ on ________, 1998 pursuant to Rule 487.
<PAGE>
<TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST
SERIES 89
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
<CAPTION>
I. ORGANIZATION AND GENERAL INFORMATION
<S> <C>
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
) Fund Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Fund Administration
4. Name and address of principal ) *
underwriter
5. Organization of trust ) The Fund
6. Execution and termination of ) The Fund
Trust Indenture and Agreement ) Fund Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
<PAGE>
<CAPTION>
II. GENERAL DESCRIPTION OF THE TRUST AND
SECURITIES OF THE TRUST
<S> <C>
10. General information regarding ) The Fund
trust's securities and ) Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Fund Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Fund
) 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
)
) Fund 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 ) Fund 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 Fund
underlying securities ) Rights of Unitholders
) Fund Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Fund Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions ) *
(c) Reserves or special funds ) Fund Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Fund Administration
20. Certain miscellaneous provisions ) Fund Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolios
) Fund Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
<CAPTION>
III. ORGANIZATION, PERSONNEL AND AFFILIATED
PERSONS OF DEPOSITOR
<S> <C>
25. Organization of Depositor ) Fund Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Fund 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 ) *
<CAPTION>
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
<S> <C>
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 ) Fund 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
) Fund 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
) Fund Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Fund Administration
<CAPTION>
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
<S> <C>
48. Organization and regulation of ) Fund Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Fund Operating Expenses
50. Trustee's lien ) Fund Operating Expenses
<CAPTION>
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
<S> <C>
51. Insurance of holders of trust's ) Cover Page
securities ) Fund Operating Expenses
52. (a) Provisions of trust agreement )
with respect to replacement ) Fund Administration
or elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying ) Fund Administration
securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Taxation
<CAPTION>
VII. FINANCIAL AND STATISTICAL INFORMATION
<S> <C>
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
</TABLE>
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 89
STRATEGIC TEN TRUST STRATEGIC PICKS OPPORTUNITY TRUST
United States Portfolio, June 1998 Series June 1998 Series
United States Portfolio, June 1998
Traditional Series
STRATEGIC FIVE TRUST EAFE STRATEGIC 20 TRUST
United States Portfolio, June 1998 Series June 1998 Series
United States Portfolio, June 1998
Traditional Series
- --------------------------------------------------------------------------------
Van Kampen American Capital Equity Opportunity Trust, Series 89 includes the
unit investment trusts described above (the "Trusts"). Each Trust uses a refined
indexing strategy that seeks to identify a diversified portfolio of well-known,
undervalued common stocks. Each Trust seeks to provide above-average total
return by increasing the value of your Units and providing dividend income. Of
course, we cannot guarantee that a Trust will achieve its objective.
A TRUST WILL REDEEM YOUR UNITS AUTOMATICALLY ON JULY 13, 1999 UNLESS YOU ELECT
IN WRITING TO HOLD UNITS THROUGH TRUST TERMINATION (JUNE 13, 2000).
The Units are not deposits or obligations of any
bank or government agency and are not guaranteed.
JUNE 8, 1998
YOU SHOULD READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved of the
Units or passed upon the adequacy or accuracy of this prospectus. Any contrary
representation is a criminal offense.
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
JUNE 8, 1998
<TABLE>
<CAPTION>
EAFE
TRADITIONAL STRATEGIC OTHER
PUBLIC OFFERING PRICE TRUSTS 20 TRUST TRUSTS
------------ ------------ ------------
<S> <C> <C> <C>
Aggregate value of Securities per Unit (1) $ 9.725 $ 9.900 $ 9.900
Sales charge (2) 0.275 0.295 0.275
Less deferred sales charge -- 0.195 0.175
Public Offering Price per Unit (3) $ 10.000 $ 10.000 $ 10.000
</TABLE>
GENERAL INFORMATION
Initial Date of Deposit............................................ June 8, 1998
Mandatory Termination Date........................................ June 13, 2000
Rollover Notification Dates...................... June 14, 1999 and May 15, 2000
Special Redemption Dates........................ July 13, 1999 and June 13, 2000
Record Dates.......................................... December 10 and August 10
Distribution Dates.................................... December 25 and August 25
<TABLE>
<CAPTION>
ESTIMATED ESTIMATED
INITIAL AGGREGATE INITIAL ANNUAL REDEMPTION
NUMBER OF VALUE OF DISTRIBUTION DIVIDENDS PRICE PER
TRUST INFORMATION UNITS (4) SECURITIES (1) PER UNIT (5) PER UNIT (5) UNIT (6)
------------ -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Strategic Ten United States Trust 15,170 $ 150,175 $ .12 $ .25833 $ 9.725
Strategic Ten United States
Traditional Trust 15,171 $ 147,537 $ .12 $ .25377 $ 9.725
Strategic Five United States Trust 15,097 $ 149,458 $ .09 $ .21412 $ 9.725
Strategic Five United States
Traditional Trust 15,097 $ 146,817 $ .09 $ .21034 $ 9.725
Strategic Picks Opportunity Trust 15,043 $ 148,917 $ .10 $ .22062 $ 9.725
EAFE Strategic 20 Trust 29,774 $ 294,760 $ .16 $ .36871 $ 9.700
- -------------------
(1)Each Security is valued at the last closing sale price on its principal
trading exchange (based on the offer side exchange rate for foreign
Securities).
(2)This is the maximum first year sales charge. The total sales charge is
described in the "Fee Table".
(3)The Public Offering Price will include any accumulated dividends or cash in
the Income or Capital Accounts of a Trust.
(4)At the Evaluation Time on the day after the Initial Date of Deposit, the
number of Units may be adjusted so that the Public Offering Price per Unit
equals $10. The number of Units and fractional interest of each Unit in a
Trust will increase or decrease to the extent of any adjustment.
(5)This estimate is based on the most recently declared quarterly dividends or
interim and final dividends accounting for any foreign withholding taxes.
Actual dividends may vary due to a variety of factors. See "Risk Factors".
(6)Units redeemed before the first Special Redemption Date will be charged the
remaining first year deferred sales charge. See "Rights of
Unitholders--Redemption of Units".
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FEE TABLE
EAFE
TRADITIONAL STRATEGIC 20 OTHER
TRANSACTION FEES (AS % OF OFFERING PRICE) TRUSTS TRUST TRUSTS
---------- ---------- ------
<S> <C> <C> <C>
Initial Sales Charge (1)............................. 2.75% 1.00% 1.00 %
Deferred Sales Charge (2)(3)......................... 0.00% 1.95% 1.75 %
------ ------ ------
Sales Charge (3)..................................... 2.75% 2.95% 2.75 %
====== ====== ======
Maximum sales charge on reinvested dividends......... 1.75% 1.95% 1.75 %
====== ====== ======
<CAPTION>
TRUSTEE'S SUPERVISORY ESTIMATED
FEE AND AND ANNUAL
OPERATING EVALUATION ORGANIZATIONAL EXPENSES
ESTIMATED ANNUAL EXPENSES PER UNIT EXPENSES FEES COSTS (4) PER UNIT
-------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
Strategic Ten United States Trust $ 0.00700 $ 0.00500 $ 0.01041 $ 0.02241
Strategic Ten United States Traditional Trust $ 0.00774 $ 0.00500 $ 0.02895 $ 0.04169
Strategic Five United States Trust $ 0.00714 $ 0.00500 $ 0.01068 $ 0.02282
Strategic Five United States Traditional Trust $ 0.00962 $ 0.00500 $ 0.04661 $ 0.06123
Strategic Picks Opportunity Trust $ 0.00937 $ 0.00500 $ 0.02305 $ 0.03742
EAFE Strategic 20 Trust $ 0.01031 $ 0.00500 $ 0.00889 $ 0.02420
<CAPTION>
ESTIMATED COSTS OVER TIME ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Strategic Ten United States Trust $ 30 $ 71 N/A N/A
Strategic Ten United States Traditional Trust $ 32 $ 77 N/A N/A
Strategic Five United States Trust $ 30 $ 71 N/A N/A
Strategic Five United States Traditional Trust $ 34 $ 83 N/A N/A
Strategic Picks Opportunity Trust $ 31 $ 75 N/A N/A
EAFE Strategic 20 Trust $ 32 $ 77 N/A N/A
</TABLE>
This fee table is intended to assist investors in understanding the costs
that an investor will bear and to present a comparison of fees. The "Estimated
Costs Over Time" example illustrates the expenses you would pay on a $1,000
investment assuming a 5% annual return and redemption at the end of each period.
This example assumes that an investment is rolled over each year into a new
series of the Trust and that all distributions are reinvested at the end of each
year. Of course, this example should not be considered a representation of
actual past or future expenses or annual rate of return which may differ from
those assumed for purposes of this example. The sales charge and expenses are
described under "Public Offering" and "Trust Operating Expenses".
- -------------------
(1)The Initial Sales Charge is the difference between the Sales Charge and the
Deferred Sales Charge. No deferred sales charge is imposed on Traditional
Trusts during the first year.
(2)This is the deferred sales charge imposed during a Trust's first year and is
actually equal to $0.175 per Unit ($0.195 per Unit for the EAFE Strategic 20
Trust). This amount will exceed the percentage above if the Public Offering
Price per Unit falls below $10 and will be less than the percentage above if
the Public Offering Price per Unit exceeds $10. The first year deferred sales
charge accrues daily and is assessed from August 11, 1998 through June 11,
1999.
(3)Unitholders of all Trusts who elect to hold Units after the first Special
Redemption Date will pay a deferred sales charge. This deferred sales charge
is equal to $0.17 per Unit for the EAFE Strategic 20 Trust and $0.15 per Unit
for all other Trusts. Accordingly, the total sales charge over a two-year
period would be 4.65% of the Public Offering Price for the EAFE Strategic 20
Trust and 4.25% of the Public Offering Price for all other Trusts. The second
year deferred sales charge is assessed on June 14, 1999 for the Traditional
Trusts and for all other Trusts the second year deferred sales charge accrues
daily and is assessed from August 10, 1999 through April 10, 2000.
(4)Each Trust will pay all or a portion of its organizational costs which will
be amortized over one year. See "Statements of Condition" and "Trust
Operating Expenses".
STRATEGIC TEN TRUST UNITED STATES PORTFOLIO, JUNE 1998 SERIES
The Trust follows a simple investment strategy: buy the ten highest
dividend-yielding stocks in the Dow Jones Industrial Average and hold them for
about one year. On July 13, 1999, you can elect one of three options:
One Year Strategy: Continue to follow the strategy by redeeming your Units
and reinvesting the proceeds in a new trust portfolio, if available.
Two Year Strategy: Elect to hold your Units for the full two-year term of the
current Trust. On June 13, 2000, you may elect to reinvest your termination
proceeds into a new trust portfolio, if available. This option may allow you to
benefit from a lower capital gains tax rate for investments held for more than
18 months if capital gains are realized.
Redemption: If you do not make an election, the Trustee will redeem your
Units. You will receive a cash distribution of your share of the Trust's assets.
The Trust is designed as part of a long-term investment strategy. You may
achieve more consistent overall results by following the strategy over several
years. For more information see "Special Redemption and Rollover".
This Trust and the Strategic Ten Trust United States Traditional Trust offer
the same investment strategy in two separate portfolios with different sales
charge structures. While each Trust initially holds stocks of the same issuers,
the performance of each Trust will differ and the actual composition of each
portfolio may differ.
<TABLE>
<CAPTION>
HYPOTHETICAL AVERAGE ANNUAL TOTAL RETURN
- ------------------------------------------------------------------------------------------------------------------------
ONE YEAR STRATEGY TWO YEAR STRATEGY
TWO YEAR
PERIOD ENDED
YEAR DJIA TEN DJIA YEAR DJIA TEN DJIA DECEMBER 31 DJIA TEN DJIA
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1973 3.96% (13.16)% 1986 35.77% 26.92% 1974 (4.70)% (18.34)%
1974 (0.72) (23.21) 1987 5.93 6.02 1976 51.22 33.17
1975 56.52 44.48 1988 24.75 15.95 1978 3.53 (5.32)
1976 34.93 22.75 1989 25.08 31.71 1980 20.25 15.84
1977 (1.75) (12.70) 1990 (7.57) (0.58) 1982 16.85 10.23
1978 0.12 2.69 1991 34.86 23.93 1984 23.59 12.70
1979 12.37 10.52 1992 7.85 7.35 1986 29.41 29.82
1980 27.23 21.41 1993 26.93 16.74 1988 14.63 10.87
1981 7.52 (3.40) 1994 4.12 4.95 1990 10.43 14.43
1982 26.03 25.79 1995 36.58 36.49 1992 26.30 15.34
1983 38.75 25.65 1996 28.05 28.58 1994 16.76 10.69
1984 11.82 1.08 1997 21.98 24.78 1996 34.30 32.48
1985 29.45 32.78 1998 thru 3/31 9.17 11.74 1998 thru 3/31 30.97 30.46
See "Notes to Hypothetical Performance Tables".
</TABLE>
HYPOTHETICAL STRATEGY PERFORMANCE
The table on the opposite page compares the hypothetical total return of
stocks selected using the Trust's investment strategy (the "DJIA Ten") with the
stocks in the Dow Jones Industrial Average ("DJIA"). Total return includes any
dividends paid on the stocks together with any increase or decrease in the value
of the stocks. The One Year Strategy illustrates a hypothetical investment in
the DJIA Ten at the beginning of each year -- similar to buying Units of the
Trust, redeeming them after one year and reinvesting the proceeds in a new trust
portfolio each year. The Two Year Strategy illustrates a hypothetical investment
in the DJIA Ten at the beginning of every other year and holding those stocks
for two years -- similar to buying Units of the Trust, holding them for two
years until the Trust terminates and reinvesting the proceeds in a new trust
portfolio at termination.
These hypothetical returns are not actual past performance of the Trust or
prior series and do not reflect the sales charge or expenses you will pay. Of
course, these hypothetical returns are not guarantees of future results and the
value of your Units will fluctuate. For more information about the total return
calculations, see "Notes to Hypothetical Performance Tables".
<TABLE>
<CAPTION>
PORTFOLIO
- --------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) TO TRUST (2)
- ---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
242 AT&T Corporation $ 61.875 2.13 % $ 14,973.75
269 Caterpillar, Inc. 56.500 1.77 15,198.50
182 Chevron Corporation 82.500 2.96 15,015.00
212 Eastman Kodak Company 69.563 2.53 14,747.25
209 Exxon Corporation 71.813 2.28 15,008.81
198 General Motors Corporation 75.250 2.66 14,899.50
313 International Paper Company 47.438 2.11 14,847.94
122 J.P. Morgan & Company, Inc. 122.375 3.11 14,929.75
159 Minnesota Mining & Manufacturing Company 93.625 2.35 14,886.38
405 Philip Morris Companies, Inc. 38.688 4.14 15,668.44
- ---------- -------------
2,311 $ 150,175.32
========== =============
</TABLE>
STRATEGIC TEN TRUST UNITED STATES PORTFOLIO, JUNE 1998 TRADITIONAL SERIES
The Trust follows a simple investment strategy: buy the ten highest
dividend-yielding stocks in the Dow Jones Industrial Average and hold them for
about one year. On July 13, 1999, you can elect one of three options:
One Year Strategy: Continue to follow the strategy by redeeming your Units
and reinvesting the proceeds in a new trust portfolio, if available.
Two Year Strategy: Elect to hold your Units for the full two-year term of the
current Trust. On June 13, 2000, you may elect to reinvest your termination
proceeds into a new trust portfolio, if available. This option may allow you to
benefit from a lower capital gains tax rate for investments held for more than
18 months if capital gains are realized.
Redemption: If you do not make an election, the Trustee will redeem your
Units. You will receive a cash distribution of your share of the Trust's assets.
The Trust is designed as part of a long-term investment strategy. You may
achieve more consistent overall results by following the strategy over several
years. For more information see "Special Redemption and Rollover".
This Trust and the Strategic Ten Trust United States Trust offer the same
investment strategy in two separate portfolios with different sales charge
structures. While each Trust initially holds stocks of the same issuers, the
performance of each Trust will differ and the actual composition of each
portfolio may differ.
<TABLE>
<CAPTION>
HYPOTHETICAL AVERAGE ANNUAL TOTAL RETURN
- ------------------------------------------------------------------------------------------------------------------------
ONE YEAR STRATEGY TWO YEAR STRATEGY
TWO YEAR
PERIOD ENDED
YEAR DJIA TEN DJIA YEAR DJIA TEN DJIA DECEMBER 31 DJIA TEN DJIA
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1973 3.96% (13.16)% 1986 35.77% 26.92% 1974 (4.70)% (18.34)%
1974 (0.72) (23.21) 1987 5.93 6.02 1976 51.22 33.17
1975 56.52 44.48 1988 24.75 15.95 1978 3.53 (5.32)
1976 34.93 22.75 1989 25.08 31.71 1980 20.25 15.84
1977 (1.75) (12.70) 1990 (7.57) (0.58) 1982 16.85 10.23
1978 0.12 2.69 1991 34.86 23.93 1984 23.59 12.70
1979 12.37 10.52 1992 7.85 7.35 1986 29.41 29.82
1980 27.23 21.41 1993 26.93 16.74 1988 14.63 10.87
1981 7.52 (3.40) 1994 4.12 4.95 1990 10.43 14.43
1982 26.03 25.79 1995 36.58 36.49 1992 26.30 15.34
1983 38.75 25.65 1996 28.05 28.58 1994 16.76 10.69
1984 11.82 1.08 1997 21.98 24.78 1996 34.30 32.48
1985 29.45 32.78 1998 thru 3/31 9.17 11.74 1998 thru 3/31 30.97 30.46
</TABLE>
See "Notes to Hypothetical Performance Tables".
HYPOTHETICAL STRATEGY PERFORMANCE
The table on the opposite page compares the hypothetical total return of
stocks selected using the Trust's investment strategy (the "DJIA Ten") with the
stocks in the Dow Jones Industrial Average ("DJIA"). Total return includes any
dividends paid on the stocks together with any increase or decrease in the value
of the stocks. The One Year Strategy illustrates a hypothetical investment in
the DJIA Ten at the beginning of each year -- similar to buying Units of the
Trust, redeeming them after one year and reinvesting the proceeds in a new trust
portfolio each year. The Two Year Strategy illustrates a hypothetical investment
in the DJIA Ten at the beginning of every other year and holding those stocks
for two years -- similar to buying Units of the Trust, holding them for two
years until the Trust terminates and reinvesting the proceeds in a new trust
portfolio at termination.
These hypothetical returns are not actual past performance of the Trust or
prior series and do not reflect the sales charge or expenses you will pay. Of
course, these hypothetical returns are not guarantees of future results and the
value of your Units will fluctuate. For more information about the total return
calculations, see "Notes to Hypothetical Performance Tables".
<TABLE>
<CAPTION>
PORTFOLIO
- -------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) TO TRUST (2)
- ---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
238 AT&T Corporation $ 61.875 2.13 % $ 14,726.25
264 Caterpillar, Inc. 56.500 1.77 14,916.00
178 Chevron Corporation 82.500 2.96 14,685.00
208 Eastman Kodak Company 69.563 2.53 14,469.00
205 Exxon Corporation 71.813 2.28 14,721.56
195 General Motors Corporation 75.250 2.66 14,673.75
307 International Paper Company 47.438 2.11 14,563.31
120 J.P. Morgan & Company, Inc. 122.375 3.11 14,685.00
157 Minnesota Mining & Manufacturing Company 93.625 2.35 14,699.13
398 Philip Morris Companies, Inc. 38.688 4.14 15,397.63
- ---------- -------------
2,270 $ 147,536.63
========== =============
See "Notes to Portfolios".
</TABLE>
STRATEGIC FIVE TRUST UNITED STATES PORTFOLIO, JUNE 1998 SERIES
The Trust follows a simple investment strategy: Select the ten highest
dividend-yielding stocks in the Dow Jones Industrial Average. Eliminate the
stock with the lowest share price. Of the remaining stocks, buy the five with
the lowest share price and hold them for about one year. On July 13, 1999, you
can elect one of three options:
One Year Strategy: Continue to follow the strategy by redeeming your Units
and reinvesting the proceeds in a new trust portfolio, if available.
Two Year Strategy: Elect to hold your Units for the full two-year term of the
current Trust. On June 13, 2000, you may elect to reinvest your termination
proceeds into a new trust portfolio, if available. This option may allow you to
benefit from a lower capital gains tax rate for investments held for more than
18 months if capital gains are realized.
Redemption: If you do not make an election, the Trustee will redeem your
Units. You will receive a cash distribution of your share of the Trust's assets.
The Trust is designed as part of a long-term investment strategy. You may
achieve more consistent overall results by following the strategy over several
years. For more information see "Special Redemption and Rollover".
This Trust and the Strategic Five Trust United States Traditional Trust offer
the same investment strategy in two separate portfolios with different sales
charge structures. While each Trust initially holds stocks of the same issuers,
the performance of each Trust will differ and the actual composition of each
portfolio may differ.
<TABLE>
<CAPTION>
HYPOTHETICAL AVERAGE ANNUAL TOTAL RETURN
- -----------------------------------------------------------------------------------------------------------------------
ONE YEAR STRATEGY TWO YEAR STRATEGY
TWO YEAR
PERIOD ENDED
YEAR DJIA FIVE DJIA YEAR DJIA FIVE DJIA DECEMBER 31 DJIA FIVE DJIA
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1973 18.58% (13.16)% 1986 36.10% 26.92% 1974 2.99% (18.34)%
1974 0.56 (23.21) 1987 (2.75) 6.02 1976 52.83 33.17
1975 64.54 44.48 1988 22.65 15.95 1978 (0.07) (5.32)
1976 39.29 22.75 1989 10.49 31.71 1980 32.71 15.84
1977 (4.82) (12.70) 1990 (20.71) (0.58) 1982 13.72 10.23
1978 0.76 2.69 1991 56.02 23.93 1984 24.04 12.70
1979 19.86 10.52 1992 24.96 7.35 1986 37.09 29.82
1980 32.33 21.41 1993 38.67 16.74 1988 10.41 10.87
1981 3.15 (3.40) 1994 3.33 4.95 1990 0.62 14.43
1982 48.11 25.79 1995 42.57 36.49 1992 41.48 15.34
1983 43.50 25.65 1996 32.06 28.58 1994 23.40 10.69
1984 11.60 1.08 1997 27.68 24.78 1996 36.16 32.48
1985 37.00 32.78 1998 thru 3/31 7.63 11.74 1998 thru 3/31 28.96 30.46
See "Notes to Hypothetical Performance Tables".
</TABLE>
HYPOTHETICAL STRATEGY PERFORMANCE
The table on the opposite page compares the hypothetical total return of
stocks selected using the Trust's investment strategy (the "DJIA Five") with the
stocks in the Dow Jones Industrial Average ("DJIA"). Total return includes any
dividends paid on the stocks together with any increase or decrease in the value
of the stocks. The One Year Strategy illustrates a hypothetical investment in
the DJIA Five at the beginning of each year -- similar to buying Units of the
Trust, redeeming them after one year and reinvesting the proceeds in a new trust
portfolio each year. The Two Year Strategy illustrates a hypothetical investment
in the DJIA Five at the beginning of every other year and holding those stocks
for two years -- similar to buying Units of the Trust, holding them for two
years until the Trust terminates and reinvesting the proceeds in a new trust
portfolio at termination.
These hypothetical returns are not actual past performance of the Trust or
prior series and do not reflect the sales charge or expenses you will pay. Of
course, these hypothetical returns are not guarantees of future results and the
value of your Units will fluctuate. For more information about the total return
calculations, see "Notes to Hypothetical Performance Tables".
<TABLE>
<CAPTION>
PORTFOLIO
- --------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) TO TRUST (2)
- ---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
484 AT&T Corporation $ 61.875 2.13 % $ 29,947.50
538 Caterpillar, Inc. 56.500 1.77 30,397.00
424 Eastman Kodak Company 69.563 2.53 29,494.50
418 Exxon Corporation 71.813 2.28 30,017.63
624 International Paper Company 47.438 2.11 29,601.00
- ---------- -------------
2,488 $ 149,457.63
========== =============
</TABLE>
STRATEGIC FIVE TRUST UNITED STATES PORTFOLIO, JUNE 1998 TRADITIONAL SERIES
The Trust follows a simple investment strategy: Select the ten highest
dividend-yielding stocks in the Dow Jones Industrial Average. Eliminate the
stock with the lowest share price. Of the remaining stocks, buy the five with
the lowest share price and hold them for about one year. On July 13, 1999, you
can elect one of three options:
One Year Strategy: Continue to follow the strategy by redeeming your Units
and reinvesting the proceeds in a new trust portfolio, if available.
Two Year Strategy: Elect to hold your Units for the full two-year term of the
current Trust. On June 13, 2000, you may elect to reinvest your termination
proceeds into a new trust portfolio, if available. This option may allow you to
benefit from a lower capital gains tax rate for investments held for more than
18 months if capital gains are realized.
Redemption: If you do not make an election, the Trustee will redeem your
Units. You will receive a cash distribution of your share of the Trust's assets.
The Trust is designed as part of a long-term investment strategy. You may
achieve more consistent overall results by following the strategy over several
years. For more information see "Special Redemption and Rollover".
This Trust and the Strategic Five Trust United States Trust offer the same
investment strategy in two separate portfolios with different sales charge
structures. While each Trust initially holds stocks of the same issuers, the
performance of each Trust will differ and the actual composition of each
portfolio may differ.
<TABLE>
<CAPTION>
HYPOTHETICAL AVERAGE ANNUAL TOTAL RETURN
- -----------------------------------------------------------------------------------------------------------------------
ONE YEAR STRATEGY TWO YEAR STRATEGY
TWO YEAR
PERIOD ENDED
YEAR DJIA FIVE DJIA YEAR DJIA FIVE DJIA DECEMBER 31 DJIA FIVE DJIA
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1973 18.58% (13.16)% 1986 36.10% 26.92% 1974 2.99% (18.34)%
1974 0.56 (23.21) 1987 (2.75) 6.02 1976 52.83 33.17
1975 64.54 44.48 1988 22.65 15.95 1978 (0.07) (5.32)
1976 39.29 22.75 1989 10.49 31.71 1980 32.71 15.84
1977 (4.82) (12.70) 1990 (20.71) (0.58) 1982 13.72 10.23
1978 0.76 2.69 1991 56.02 23.93 1984 24.04 12.70
1979 19.86 10.52 1992 24.96 7.35 1986 37.09 29.82
1980 32.33 21.41 1993 38.67 16.74 1988 10.41 10.87
1981 3.15 (3.40) 1994 3.33 4.95 1990 0.62 14.43
1982 48.11 25.79 1995 42.57 36.49 1992 41.48 15.34
1983 43.50 25.65 1996 32.06 28.58 1994 23.40 10.69
1984 11.60 1.08 1997 27.68 24.78 1996 36.16 32.48
1985 37.00 32.78 1998 thru 3/31 7.63 11.74 1998 thru 3/31 28.96 30.46
See "Notes to Hypothetical Performance Tables".
</TABLE>
HYPOTHETICAL STRATEGY PERFORMANCE
The table on the opposite page compares the hypothetical total return of
stocks selected using the Trust's investment strategy (the "DJIA Five") with the
stocks in the Dow Jones Industrial Average ("DJIA"). Total return includes any
dividends paid on the stocks together with any increase or decrease in the value
of the stocks. The One Year Strategy illustrates a hypothetical investment in
the DJIA Five at the beginning of each year -- similar to buying Units of the
Trust, redeeming them after one year and reinvesting the proceeds in a new trust
portfolio each year. The Two Year Strategy illustrates a hypothetical investment
in the DJIA Five at the beginning of every other year and holding those stocks
for two years -- similar to buying Units of the Trust, holding them for two
years until the Trust terminates and reinvesting the proceeds in a new trust
portfolio at termination.
These hypothetical returns are not actual past performance of the Trust or
prior series and do not reflect the sales charge or expenses you will pay. Of
course, these hypothetical returns are not guarantees of future results and the
value of your Units will fluctuate. For more information about the total return
calculations, see "Notes to Hypothetical Performance Tables".
<TABLE>
<CAPTION>
PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) TO TRUST (2)
- ---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
476 AT&T Corporation $ 61.875 2.13 % $ 29,452.50
528 Caterpillar, Inc. 56.500 1.77 29,832.00
416 Eastman Kodak Company 69.563 2.53 28,938.00
411 Exxon Corporation 71.813 2.28 29,514.94
613 International Paper Company 47.438 2.11 29,079.19
- ---------- -------------
2,444 $ 146,816.63
========== =============
See "Notes to Portfolios".
</TABLE>
STRATEGIC PICKS OPPORTUNITY TRUST, JUNE 1998 SERIES
The Trust follows a simple investment strategy: Beginning with the MSCI USA
Index, remove all stocks of financial and utility companies and stocks in the
Dow Jones Industrial Average. Screen this pool of stocks to include only those
companies with positive one- and three-year sales and earnings growth and two
years of positive dividend growth. Rank the remaining stocks by annual trading
volume and select the top 75%. Buy the ten highest dividend-yielding stocks in
this "Strategic Picks Subset" and hold them for about one year.
The Trust is designed as part of a long-term investment strategy. You may
achieve more consistent overall results by following the strategy over several
years. For more information see "Special Redemption and Rollover".
On July 13, 1999, you can elect one of three options:
One Year Strategy: Continue to follow the strategy by redeeming your Units
and reinvesting the proceeds in a new trust portfolio, if available.
Two Year Strategy: Elect to hold your Units for the full two-year term of the
current Trust. On June 13, 2000, you may elect to reinvest your termination
proceeds into a new trust portfolio, if available. This option may allow you to
benefit from a lower capital gains tax rate for investments held for more than
18 months if capital gains are realized.
Redemption: If you do not make an election, the Trustee will redeem your
Units. You will receive a cash distribution of your share of the Trust's assets.
<TABLE>
<CAPTION>
HYPOTHETICAL AVERAGE ANNUAL TOTAL RETURN
- -----------------------------------------------------------------------------------------------------------------------
ONE YEAR STRATEGY TWO YEAR STRATEGY
TWO YEAR
STRATEGY MSCIUSA STRATEGY MSCIUSA PERIOD ENDED STRATEGY MSCIUSA
YEAR STOCKS INDEX YEAR STOCKS INDEX DECEMBER 31 STOCKS INDEX
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1978 13.26% 6.00% 1989 31.87% 30.21% 1979 12.07% 9.86%
1979 17.00 13.86 1990 0.52 (1.89) 1981 22.24 11.13
1980 40.64 27.97 1991 47.88 30.17 1983 30.59 20.62
1981 5.09 (3.50) 1992 2.26 7.06 1985 23.43 17.70
1982 39.84 20.13 1993 7.32 9.82 1987 21.44 10.54
1983 17.66 21.11 1994 9.91 2.05 1989 22.15 22.55
1984 10.89 5.71 1995 38.10 37.04 1991 11.27 13.01
1985 46.11 31.04 1996 23.90 23.36 1993 0.49 8.43
1986 34.86 17.02 1997 28.64 33.35 1995 21.47 18.26
1987 11.38 4.41 1998 thru 3/31 15.28 13.64 1997 25.15 28.26
1988 16.05 15.34 1998 thru 3/31 15.28 13.64
See "Notes to Hypothetical Performance Tables".
</TABLE>
HYPOTHETICAL STRATEGY PERFORMANCE
The table on the opposite page compares the hypothetical total return of
stocks selected using the Trust's investment strategy (the "Strategy Stocks")
with the stocks in the MSCI USA Index. Total return includes any dividends paid
on the stocks together with any increase or decrease in the value of the stocks.
The One Year Strategy illustrates a hypothetical investment in the Strategy
Stocks at the beginning of each year -- similar to buying Units of the Trust,
redeeming them after one year and reinvesting the proceeds in a new trust
portfolio each year. The Two Year Strategy illustrates a hypothetical investment
in the Strategy Stocks at the beginning of every other year and holding those
stocks for two years -- similar to buying Units of the Trust, holding them for
two years until the Trust terminates and reinvesting the proceeds in a new trust
portfolio at termination.
These hypothetical returns are not actual past performance of the Trust or
prior series and do not reflect the sales charge or expenses you will pay. Of
course, these hypothetical returns are not guarantees of future results and the
value of your Units will fluctuate. For more information about the total return
calculations, see "Notes to Hypothetical Performance Tables".
<TABLE>
<CAPTION>
PORTFOLIO
- --------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) TO TRUST (2)
- ---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
291 American Home Products Corporation $ 51.563 1.67 % $ 15,004.69
391 AMP, Inc. 38.250 2.82 14,955.75
311 Anheuser-Busch Companies, Inc. 47.625 2.18 14,811.38
497 Conagra, Inc. 30.375 2.06 15,096.38
314 CSX Corporation 47.375 2.53 14,875.75
328 General Dynamics Corporation 45.563 1.93 14,944.50
435 Genuine Parts Company 34.375 2.91 14,953.13
316 Harris Corporation 45.438 1.94 14,358.25
271 Heinz (H.J.) Company 55.125 2.29 14,938.88
230 May Department Stores Company 65.125 1.95 14,978.75
- ---------- -------------
3,384 $ 148,917.46
========== =============
See "Notes to Portfolios".
</TABLE>
EAFE STRATEGIC 20 TRUST, JUNE 1998 SERIES
The Trust follows a simple investment strategy: Begin with the stocks in the
MSCI Europe, Australasia and Far East Index, one of the most widely-used
benchmarks for international investing. Screen these stocks to include only
those companies with positive one- and three-year sales and earnings growth and
two years of positive dividend growth. Rank the remaining stocks by market
capitalization and select the top 75%. Buy the twenty highest dividend-yielding
stocks in this "EAFESM Subset" and hold them for about one year.
The Trust is designed as part of a long-term investment strategy. You may
achieve more consistent overall results by following the strategy over several
years. For more information see "Special Redemption and Rollover".
On July 13, 1999, you can elect one of three options:
One Year Strategy: Continue to follow the strategy by redeeming your Units
and reinvesting the proceeds in a new trust portfolio, if available.
Two Year Strategy: Elect to hold your Units for the full two-year term of the
current Trust. On June 13, 2000, you may elect to reinvest your termination
proceeds into a new trust portfolio, if available. This option may allow you to
benefit from a lower capital gains tax rate for investments held for more than
18 months if capital gains are realized.
Redemption: If you do not make an election, the Trustee will redeem your
Units. You will receive a cash distribution of your share of the Trust's assets.
<TABLE>
<CAPTION>
HYPOTHETICAL AVERAGE ANNUAL TOTAL RETURN
- ------------------------------------------------------------------------------------------------------------------------
ONE YEAR STRATEGY TWO YEAR STRATEGY
MSCI MSCI TWO YEAR MSCI
STRATEGY EAFESM STRATEGY EAFESM PERIOD ENDED STRATEGY EAFESM
YEAR STOCKS INDEX YEAR STOCKS INDEX DECEMBER 31 STOCKS INDEX
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1973 (20.56)% (14.17)% 1986 37.15 69.94% 1974 (26.17)% (18.25)%
1974 (39.41) (22.14) 1987 32.39 24.93 1976 31.44 19.26
1975 100.38 37.10 1988 28.25 28.59 1978 28.42 26.64
1976 (11.51) 3.74 1989 7.68 10.80 1980 14.28 14.94
1977 52.69 19.42 1990 (4.90) (23.20) 1982 6.98 (0.95)
1978 12.03 34.30 1991 21.24 12.50 1984 18.48 15.93
1979 26.96 6.18 1992 3.81 (11.85) 1986 42.62 63.20
1980 23.26 24.43 1993 62.76 32.94 1988 22.99 26.75
1981 6.49 (1.03) 1994 3.25 8.06 1990 (0.84) (7.75)
1982 (0.84) (0.86) 1995 25.50 11.55 1992 4.88 (0.42)
1983 47.49 24.61 1996 19.58 6.36 1994 13.96 19.86
1984 21.34 7.86 1997 26.01 2.06 1996 21.08 8.92
1985 50.14 56.72 1998 thru 3/31 15.41 14.30 1998 thru 3/31 38.78 8.00
See "Notes to Hypothetical Performance Tables".
</TABLE>
HYPOTHETICAL STRATEGY PERFORMANCE
The table on the opposite page compares the hypothetical total return of
stocks selected using the Trust's investment strategy (the "Strategy Stocks")
with the stocks in the MSCI EAFESM Index. Total return includes any dividends
paid on the stocks together with any increase or decrease in the value of the
stocks. The One Year Strategy illustrates a hypothetical investment in the
Strategy Stocks at the beginning of each year -- similar to buying Units of the
Trust, redeeming them after one year and reinvesting the proceeds in a new trust
portfolio each year. The Two Year Strategy illustrates a hypothetical investment
in the Strategy Stocks at the beginning of every other year and holding those
stocks for two years -- similar to buying Units of the Trust, holding them for
two years until the Trust terminates and reinvesting the proceeds in a new trust
portfolio at termination.
These hypothetical returns are not actual past performance of the Trust or
prior series and do not reflect the sales charge or expenses you will pay. Of
course, these hypothetical returns are not guarantees of future results and the
value of your Units will fluctuate. For more information about the total return
calculations, see "Notes to Hypothetical Performance Tables".
<TABLE>
<CAPTION>
PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------
CURRENT COST OF
NUMBER MARKET VALUE DIVIDEND SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) YIELD (3) TO TRUST (2)
- ---------- ----------------------------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
2,325 Australian Gas Light Company, Limited $ 6.260 3.19 % $ 14,553.99
315 BASF AG 46.956 2.16 14,791.15
312 Bayer AG 47.909 2.01 14,947.51
3,500 CLP Holdings, Limited 4.220 4.65 14,769.27
5,497 FIAT SpA 2.730 2.13 15,008.98
8,800 Hong Kong Telecommunications, Limited 1.761 6.24 15,500.95
12,000 Hong Kong & China Gas Company, Limited 1.278 3.21 15,330.61
3,000 Hutchinson Whampoa, Limited 4.917 4.15 14,749.91
103 Imetal SA 142.389 2.63 14,666.05
324 Koninlijke Hoogovens N.V. 45.845 3.06 14,853.91
6,692 North, Limited 2.155 3.32 14,419.98
203 Pernod-Ricard 71.783 2.84 14,571.91
3,868 QBE Insurance Group, Limited 3.762 3.26 14,550.98
2,200 Rothmans Pall Mall Berhad 7.018 7.68 15,438.60
263 Royal Dutch Petroleum Company 56.844 2.32 14,950.05
356 RWE AG 41.714 1.95 14,850.06
4,820 Santos, Limited 3.010 4.25 14,505.84
321 SEITA 45.474 3.11 14,597.04
3,000 Sun Hung Kai Properties, Limited 4.478 6.48 13,433.64
3,286 Telecom Corporation of New Zealand, Limited 4.342 5.92 14,269.58
- ---------- -------------
61,185 $ 294,760.01
========== =============
</TABLE>
NOTES TO HYPOTHETICAL PERFORMANCE TABLES
The stocks for each strategy for each period were identified by applying the
applicable Trust strategy on the first trading day of the period on the
principal trading exchange. It should be noted that the stocks in any table are
not the same stocks from year to year and may not be the same stocks as those
included in any Trust. Total return for each period was calculated by (1)
subtracting the closing sale price of the stocks on the first trading day of the
period from the closing sale price of the stocks on the last trading day of the
period, (2) adding dividends paid during that period and (3) dividing the result
by the closing sale price of the stocks on the first trading day of the period.
In the case of the Two Year Strategy figures, the total return for the period is
divided by two to compute the hypothetical average annual total return over each
two-year period. Adjustments were made to reflect events such as stock splits
and corporate spin-offs. Total return does not take into consideration sales
charges, commissions, expenses or taxes that will be incurred by Unitholders.
With respect to foreign securities, all values are converted into U.S. dollars
using the applicable offering side currency exchange rate.
These tables represent hypothetical past performance of the Trust strategies
(not the Trusts) and are not guarantees or indications of future performance of
any Trust. Unitholders will not necessarily realize as high a total return as
the hypothetical returns in the tables for several reasons including, among
others: the total return figures in the tables do not reflect sales charges,
commissions, Trust expenses or taxes; the Trusts are established at different
times of the year; a Trust may not be able to invest equally in the Securities
and may not be fully invested at all times; the Securities are often purchased
or sold at prices different from the closing prices used in buying and selling
Units; and currency exchange rates will be different. In addition, both stock
prices (which may appreciate or depreciate) and dividends (which may be
increased, reduced or eliminated) will affect actual returns. There can be no
assurance that any Trust will outperform the related stock index over thirteen
months, its life or future rollover periods, if available. The sources for the
information contained in the tables are Barron's, Bloomberg L.P., Dow Jones
Corporation, Morgan Stanley Capital International, Ibbotson Associates,
Datastream International, Inc., Extell Financial LTD. and the Hong Kong Stock
Exchange. The Sponsor has not independently verified the data obtained from
these sources but has no reason to believe that this data is incorrect in any
material respect.
NOTES TO PORTFOLIOS
(1) The Securities are initially represented by "regular way" contracts for
the performance of which an irrevocable letter of credit has been deposited with
the Trustee. Contracts to acquire Securities were entered into on June 5, 1998
and have settlement dates ranging from June 10, 1998 to June 30, 1998 (see "The
Trusts).
(2) The market value of each Security is based on the closing sale price on
the applicable exchange on the day prior to the Initial Date of Deposit. Other
information regarding the Securities, as of the Initial Date of Deposit, is as
follows:
<TABLE>
<CAPTION>
PROFIT
COST TO (LOSS) TO
SPONSOR SPONSOR
-------------- -------------
<S> <C> <C>
Strategic Ten United States Trust $ 150,175 $ --
Strategic Ten United States Traditional Trust $ 147,537 $ --
Strategic Five United States Trust $ 149,458 $ --
Strategic Five United States Traditional Trust $ 146,817 $ --
Strategic Picks Opportunity Trust $ 148,917 $ --
EAFE Strategic 20 Trust $ 295,747 $ (987)
</TABLE>
(3)Current Dividend Yield for each Security was calculated by dividing the
estimated annual dividends per share by the Security's market value as of the
close of trading on the day prior to the Initial Date of Deposit. Estimated
annual dividends per share are calculated by annualizing the most recently
declared dividends or by adding the most recent interim and final dividends
declared and reflect any foreign withholding taxes.
THE SECURITIES. A brief description of each of the issuers of the Securities
is listed below. Please refer to each "Portfolio" for a list of the Securities
included in each Trust.
American Home Products Corporation. American Home Products Corporation
discovers, develops, manufactures, distributes, and sells health care products
and agricultural products. Health care products include branded and generic
ethical pharmaceuticals, biologicals, nutritionals, consumer health care
products, and animal pharmaceuticals. Agricultural products include crop
protection and pest control products.
AMP, Inc. AMP, Inc. designs, manufactures, and markets a variety of
electronic, electrical, and electro-optic connection devices, in addition to
interconnection systems and connector-intensive assemblies. The company's
products are used in electronic, electrical, computer, and telecommunications
systems. AMP's customers include OEMs, utilities, government agencies,
distributors, and others.
Anheuser-Busch Companies, Inc. Anheuser-Busch Companies, Inc., through its
subsidiaries, brews beer, produces, and acquires brewing raw materials,
manufactures, and recycles aluminum beverage containers, and operates theme
parks located in Florida, Texas, Ohio, and California.
AT&T Corporation. AT&T Corporation offers communication services and
products. The company provides voice, data, and video telecommunications
services to consumers, large and small businesses, and government entities. AT&T
and its subsidiaries furnish regional, domestic, international, and local
telecommunication services. The company also provides cellular telephone and
wireless services, as well as other services.
Caterpillar, Inc. Caterpillar, Inc. designs, manufactures, and markets
earthmoving and construction machines, as well as mining and agricultural
machinery. The company provides financing alternatives for its equipment.
Caterpillar's machines are distributed through 65 dealers in the United States
and 132 internationally. Machines are used for marine, agricultural, petroleum,
industrial, and other applications.
Australian Gas Light Company, Limited. Australian Gas Light Company, Limited
distributes, transports and sells natural gas and oil throughout Australasia.
The company primarily produces and sells petroleum products, constructs
pipelines, and invests in related companies. AGL also holds interest in
operating companies which produce and distribute gas in Australia.
BASF AG. BASF AG produces industrial and commercial raw materials and
finished products worldwide. The company explores and refines oil, operates gas
and oil distribution and storage facilities, as well as produces
pharmaceuticals, chemicals, drugs, vitamins and agricultural fertilizers and
crop protection agents. BASF also produces a variety of plastics, dyestuffs,
pigments, and polymer products.
Bayer AG. Bayer AG manufactures a variety of industrial chemicals and
polymers, as well as human and animal health care products, pharmaceuticals, and
agricultural crop protection agents. The company also produces photographic and
imaging products, and systems. Bayer markets its products to the automotive,
electronic, medical, construction, farming, textile, utility, and printing
enterprises worldwide.
Chevron Corporation. Chevron Corporation explores for, develops, and produces
crude oil and natural gas. The company also refines crude oil into finished
petroleum products, as well as markets and transports crude oil, natural gas,
and petroleum products. Chevron manufactures and markets a variety of chemicals
for industrial use and mines for coal. The company operates in the United States
and approximately 90 countries.
CLP Holdings, Limited. CLP Holdings, Limited is an investment holding company
whose subsidiaries generate and supply electricity to Kowloon and the New
Territories in Hong Kong. The company also exports electric power to Guangdong
Province in the People's Republic of China. Its subsidiaries are involved in
property investment and development.
ConAgra, Inc. ConAgra, Inc. produces good inputs and ingredients,
refrigerated foods and grocery/diversified products. The company produces a
variety of products from basic agricultural inputs to the production and sale of
branded consumer items.
CSX Corporation. CSX Corporation is an international transportation company.
The company provides rail, intermodal, container-shipping, barging, and contract
logistics services. CSX provides rail transportation and distribution services
in 20 states, the District of Columbia, and the Canadian province of Ontario.
Eastman Kodak Company. Eastman Kodak Company develops, manufactures, and
markets consumer and commercial imaging products. The company's imaging systems
include films, photographic papers, processing services, photographic chemicals,
cameras, and projectors. Kodak also develops digital camera systems which do not
use silver halide film technology.
Exxon Corporation. Exxon Corporation explores for and produces crude oil and
natural gas; manufactures petroleum products; and transports and sells crude
oil, natural gas, and petroleum products. The company also manufactures and
markets basic petrochemicals, including olefins and aromatics, as well as
supplies specialty rubbers and additives for fuels and lubricants.
Fiat SpA. Fiat SpA manufactures automobiles, commercial vehicles, farm and
construction equipment. The company produces automobiles under the "Fiat",
"Lancia", "Auto-Bianchi", "Alfa Romeo", "Innocenti", "Ferrari", and "Maserati"
brands as well as other vehicles such as tractors, combines, bulldozers, and
excavators. Fiat sells its products around the world.
General Dynamics Corporation. General Dynamics Corporation manufactures
defense products. The company designs and builds nuclear submarines for the
United States Navy and performs overhaul, repair work, and engineering services.
General Dynamics also produces battle tanks for the United States Army and
Marine Corps and offers engineering, upgrade and support services.
Genuine Parts Company. Genuine Parts Company distributes replacement
automobile and industrial parts and office products. The company operates 62
"NAPA" and three "Balkamp" automobile parts distribution centers in the United
States. Genuine's other products include industrial bearings, power transmission
equipment, material handling components, agricultural and irrigation equipment,
and office furniture.
General Motors Corporation. General Motors Corporation manufactures and sells
vehicles worldwide under the "Chevrolet", "Buick", "Cadillac", "Oldsmobile",
"Pontiac", "Saturn", and "GMC" names. The company also offers financing,
insurance, and mortgage banking, as well as manufactures satellites,
locomotives, and heavy-duty transmissions.
Harris Corporation. Harris Corporation develops and markets a range of
electronics products and services. The company provides wireless and personal
communications, digital television, health care information systems, multimedia
communications, automotive electronics, transportation, business information,
defense communications and information, and office products.
Heinz H.J. Company. Heinz H.J. Company manufactures and markets food
products. The company produces ketchup, sauces, vinegar, pickles, canned tuna,
pet food, baby food, meat products, corn syrup, and other items. Heinz's
subsidiary, Weight Watchers International operates and franchises weight control
centers and licenses diet foods to other manufacturers. The company sells its
products internationally.
Hong Kong and China Gas Company, Limited. Hong Kong and China Gas Company,
Limited produces, distributes, and markets gas and gas appliances to residential
and industrial customers. The company markets through "Towngas" brand name, for
domestic and commercial cooking and water heating as well as a heating fuel for
the industrial market. Its subsidiaries develop and manage commercial
properties, and also develop gas projects in China.
Hong Kong Telecommunications, Limited. Hong Kong Telecommunications, Limited
provides telecommunications, computer, engineering and other services. The
company also sells and rents telecommunications equipment. The principal
activities of the company were carried out in Hong Kong.
Hutchinson Whampoa, Limited. Hutchison Whampoa, Limited is an investment
holding company. It has diversified operations in property investment and
development, ports and related services, retail and manufacturing,
telecommunications, media, energy, finance, investment and other services.
Imetal SA. Imetal SA manufactures and sells building materials and industrial
minerals and processes metals. The company produces clay roofing tiles, slate,
and concrete components. Imetal is active throughout France and also has
operations through subsidiaries in the United Kingdom, Spain, the Czech
Republic, China, Canada, South Africa, Belgium, Germany, Italy, the Netherlands,
and the United States.
International Paper Company. International Paper Company manufactures
printing and writing paper, pulp, tissue, paperboard, packaging, and wood
products. The company also manufactures non-woven papers, specialty chemicals,
and specialty panels and laminated products. International paper sells its
products primarily in the United States, Europe, and the Pacific Rim.
J.P. Morgan & Company, Inc. J.P. Morgan & Company, Inc., through
subsidiaries, offers financial services to corporations, governments, financial
institutions, institutional investors, professional firms, privately-held
companies, and individuals. The company offers loans, advises on mergers,
acquisitions and privatizations, underwrites debt and equity issues, and deals
in government-issued securities worldwide.
Koninklijke Hoogovens N.V. Koninklijke Hoogovens N.V. produces steel,
aluminum, and related products. The company provides engineering, consulting,
and contracting services for steel and aluminum. Hoogovens supplies their
products to automobile manufacturers, the construction and engineering industry,
and household applications. The company also manufactures rolled and non-ferrous
products.
May Department Stores. May Department Stores Company, through its various
chains of department stores, retails a variety of goods throughout the United
States. The company operates approximately 369 department stores in 30 states
and the District of Columbia.
Minnesota Mining and Manufacturing Company. Minnesota Mining and
Manufacturing Company is a diversified manufacturer of industrial, commercial
and health care products. The company produces and markets more than 60,000
products worldwide, Minnesota Mining's products include "Post-it" Notes,
"Wetordry" sandpaper, "Scotchgard" fabric, film and photo protectors,
"thinsulate" insulation products, and "Alge Block" copper roofing.
North, Limited. North, Limited is an Australian resources company involved in
mining, forestry, and the manufacture of mining and process equipment. The
company's mining businesses include interests in the Robe River and the Iron Ore
Company of Canada iron ore operations, the Ranger uranium mine, the Kanowna
Belle and Peak Hill gold mines, the Northparkes copper-gold mine, and the
Zinkgruvan zinc mine.
Pernod Ricard. Pernod Ricard manufactures anise-based spirits, whiskey,
wines, and fruit juices. The company's brands include "Richard Pastis 51" and
"Pernod" anise-based spirits and "Orangina" fruit drinks. Pernod also
distributes "Wild Turkey", "Jameson", and "Clan Campbell" whiskeys and produces
processed fruits for the food industry. The company is active in Europe, Asia,
and the Americas.
Philip Morris Companies, Inc. Philip Morris Companies, Inc. is a consumer
packaged goods company. The company operates through five subsidiaries. Philip
Morris' products include "Bull's Eye", "Breakstone's", "Kraft", "Cambridge" and
"Marlboro" cigarettes, "Cracker Barrel" and "Polly-O" cheeses, "Crystal Light",
"Maxwell House", and "Miller", and "Milwaukee's Best" and "Meister Brau" beer.
QBE Insurance Group, Limited. QBE Insurance Group, Limited is an insurance
company which underwrites most forms of commercial and industrial insurance
policies, as well as individual policies. The coverage of the company spans
approximately 22 countries, including Fiji, Bermuda, Hong Kong, New Zealand, and
the United Kingdom. QBE also provides reinsurance policies.
Rothmans of Pall Mall Berhad. Rothmans of Pall Mall (Malaysia) Berhad is an
investment holding company whose subsidiaries manufacture, import, distribute,
and sell cigarettes and other tobacco products.
Royal Dutch Petroleum Company. Royal Dutch Petroleum Company owns 60% of the
Royal Dutch/Shell Group of companies. These companies are involved in all phases
of the petroleum industry from exploration to final processing and delivery.
Royal Dutch Petroleum Company has no operations of its own, and virtually the
whole of its income is derived from its 60% interest.
RWE AG. RWE AG, through subsidiaries, offers products and services in the
energy, mining, raw materials, petroleum, chemicals, waste disposal, mechanical
and plant engineering, construction, and civil engineering business sectors. The
company operates worldwide.
Santos, Limited. Santos, Limited is an independent oil, gas, and natural gas
liquid exploration and production company. The company conducts major onshore
and offshore petroleum activities in Australia (Cooper/Eromanga Basins), the
United States, the United Kingdom, Indonesia, and Papua New Guinea. The company
also transports crude oil by pipeline.
SEITA. SEITA manufactures cigarettes including Gauloises and Gitanes brands
as well as pipe and loose tobacco. The company distributes its own products and
its competitors' products. It also manufactures and markets cigars and matches.
Sun Hung Kai Properties, Limited. Sun Hung Kai Properties, Limited is
involved in property development and investment, hotel ownership, construction,
finance, insurance, property and parking management, cinema and
godown/warehousing operations, garment manufacturing, public transport and
telecommunications.
Telecom Corporation of New Zealand, Limited. Telecom Corporation of New
Zealand, Limited provides telecommunications services throughout New Zealand and
internationally, to both households and businesses. The company offers cellular
telephone, telephone directories and radio dispatch and paging services.
<PAGE>
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 89:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen American Capital Equity Opportunity Trust, Series 89
as of June 8, 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 an irrevocable letter of credit
deposited to purchase securities by correspondence with the Trustee. An audit
also includes assessing the accounting principles used and significant
estimates made by the Sponsor, as well as evaluating the overall 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 89 as of June 8, 1998, in conformity with
generally accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
June 8, 1998
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CONDITION
AS OF JUNE 8, 1998
STRATEGIC TEN STRATEGIC
STRATEGIC TEN UNITED STATES FIVE
UNITED STATES TRADITIONAL UNITED STATES
INVESTMENT IN SECURITIES TRUST TRUST TRUST
<S> <C> <C> <C>
Contracts to purchase Securities (1) $ 150,175 $ 147,537 $ 149,458
Organizational costs (2) 62,473 49,213 42,708
------------- ------------- ------------
Total $ 212,648 $ 196,750 $ 192,166
============= ============= ============
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Accrued organizational costs (2) $ 62,473 $ 49,213 $ 42,708
Deferred sales charge liability (3) 2,655 0 2,642
Interest of Unitholders--
Cost to investors (4) 151,700 151,710 150,970
Less: Gross underwriting commission (4)(5) 4,180 4,173 4,154
------------- ------------- ------------
Net interest to Unitholders (4) 147,520 147,537 146,816
------------- ------------- ------------
Total $ 212,648 $ 196,750 $ 192,166
============= ============= ============
- -----------------------
(1)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 separate irrevocable letters of
credit which have been deposited with the Trustee.
(2)Each Trust will bear all or a portion of its organizational costs, which
will be deferred and amortized over one year. Organizational costs have been
estimated based on a projected Trust size of $60,000,000, $17,000,000 and
$40,000,000 for the Strategic Ten United States, Strategic Ten United States
Traditional and Strategic Five United States Trusts, respectively. To the
extent a Trust is larger or smaller, the estimate will vary.
(3)Represents the amount of mandatory distributions from a Trust on the bases
set forth under "Public Offering".
(4)The aggregate public offering price and the aggregate first year sales charge
are computed on the bases set forth under "Public Offering-- Offering Price".
(5)Assumes only the first year sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CONDITION
AS OF JUNE 8, 1998
STRATEGIC FIVE STRATEGIC
UNITED STATES PICKS EAFE
TRADITIONAL OPPORTUNITY STRATEGIC 20
INVESTMENT IN SECURITIES TRUST TRUST TRUST
<S> <C> <C> <C>
Contracts to purchase Securities (1) $ 146,817 $ 148,917 $ 294,760
Organizational costs (2) 27,968 34,573 44,470
-------------- ------------- -------------
Total $ 174,785 $ 183,490 $ 339,230
============== ============= =============
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Accrued organizational costs (2) $ 27,968 $ 34,573 $ 44,470
Deferred sales charge liability (3) 0 2,633 5,806
Interest of Unitholders--
Cost to investors (4) 150,970 150,430 297,740
Less: Gross underwriting commission (4)(5) 4,153 4,146 8,786
-------------- ------------- -------------
Net interest to Unitholders (4) 146,817 146,284 288,954
-------------- ------------- -------------
Total $ 174,785 $ 183,490 $ 339,230
============== ============= =============
- -----------------------
(1)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 separate irrevocable letters of
credit which have been deposited with the Trustee.
(2)Each Trust will bear all or a portion of its organizational costs, which
will be deferred and amortized over one year. Organizational costs have been
estimated based on a projected Trust size of $6,000,000, $15,000,000 and
$50,000,000 for the Strategic Five United States Traditional, Strategic Picks
Opportunity and EAFE Strategic 20 Trusts, respectively. To the extent a Trust
is larger or smaller, the estimate will vary.
(3)Represents the amount of mandatory distributions from a Trust on the bases
set forth under "Public Offering".
(4)The aggregate public offering price and the aggregate first year sales charge
are computed on the bases set forth under "Public Offering-- Offering Price".
(5)Assumes only the first year sales charge.
</TABLE>
<PAGE>
THE TRUSTS
- --------------------------------------------------------------------------------
The Trusts were 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 portfolios of actively traded equity securities which
are components of the Dow Jones Industrial Average ("DJIA"), the Morgan Stanley
Capital International USA Index ("MSCI USAIndex") or the Morgan Stanley Capital
International Europe, Australasia and Far East Index ("MSCI EAFESM Index"). The
Strategic Ten Trusts consist of the ten highest dividend yielding stocks in the
DJIA. The Strategic Five Trusts consist of the five stocks having the 2nd
through 6th lowest per share stock price of the ten highest dividend yielding
stocks in the DJIA. The Strategic Picks Trust consists of the ten highest
dividend yielding stocks selected from a subset of the MSCI USA Index. The
EAFEStrategic 20 Trust consists of the twenty highest dividend yielding stocks
selected from a subset of the MSCI EAFESM Index.
A Trust may be an appropriate medium for investors who desire to participate
in a portfolio of common stocks with greater diversification than they might be
able to acquire individually and who are seeking to achieve a better performance
than the related indexes through an investment in the highest dividend yielding
stocks of these indexes. An investment in approximately equal values of such
stocks each year has in most instances provided a higher total return than
investments in all of the stocks which are components of the respective indexes.
On the Initial Date of Deposit, the Sponsor deposited delivery statements
relating to contracts for the purchase of the Securities and an irrevocable
letter of credit in the amount required for these purchases with the Trustee. In
exchange for these contracts the Trustee delivered to the Sponsor documentation
evidencing the ownership of Units of the Trusts. Unless otherwise terminated as
provided in the Trust Agreement, the Trusts will terminate on the Mandatory
Termination Date and any remaining Securities will be liquidated or distributed
by the Trustee within a reasonable time. As used in this Prospectus the term
"Securities" means the securities (including contracts to purchase these
securities) listed in "Portfolio" for each Trust and any additional securities
deposited into each Trust.
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, the aggregate value of the Securities will be increased and
the fractional undivided interest represented by each Unit will be decreased.
The Sponsor may continue to make additional deposits into a Trust following the
Initial Date of Deposit provided that the additional deposits will be in amounts
which will maintain, as nearly as practicable, the same percentage relationship
among the number of shares of each Security in the Trustportfolio that existed
immediately prior to the subsequent deposit. Investors may experience a dilution
of their investments and a reduction in their anticipated income because of
fluctuations in the prices of the Securities between the time of the deposit and
the purchase of the Securities and because the Trusts will pay the associated
brokerage or acquisition fees.
Each Unit of a Trust initially offered represents an undivided interest in
that 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 that Trust represented by
each unredeemed Unit will increase or decrease accordingly, although the actual
interest in the Trust 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.
Each Trust consists of (a) the Securities (including contracts for the
purchase thereof) listed under the applicable "Portfolio" as may continue to be
held from time to time in the Trust, (b) any additional Securities acquired and
held by the Trust pursuant to the provisions of the Trust Agreement and (c) any
cash held in the related Income and Capital Accounts. Neither the Sponsor nor
the Trustee shall be liable in any way for any failure in any of the Securities.
OBJECTIVES AND SECURITIES SELECTION
- --------------------------------------------------------------------------------
The objective of each Trust is to provide an above average total return
through a combination of potential capital appreciation and dividend income,
consistent with the preservation of invested capital, by investing in a
portfolio of actively traded equity securities selected using the Trust's
investment strategy. There is no assurance that a Trust will achieve its
objective.
The Strategic Ten Trust portfolios are selected by ranking the DJIA stocks by
dividend yield and including the ten highest dividend yielding stocks in the
related Trust portfolio.
The Strategic Five Trust portfolios are selected by implementing the
following strategy. The ten highest dividend yielding DJIA stocks are
identified. These stocks are ranked by share price and the lowest priced stock
is eliminated. Of the remaining nine stocks, the five lowest priced stocks are
selected for the Trust portfolio.
The Strategic Picks Trust portfolio is selected by implementing the following
investment strategy. Beginning with the MSCI USA Index, all stocks of companies
in the financial or utility sectors and stocks in the DJIA are removed. This
pool of stocks is screened to include only those companies that have positive
one- and three-year sales and earnings growth rates and two years of positive
dividend growth. The remaining stocks are ranked highest to lowest by annual
trading volume and only the top 75% are retained. The remaining stocks (the
"Strategic Picks Subset") are ranked by dividend yield and the ten highest
dividend yielding stocks are selected for the Trust portfolio.
The EAFEStrategic 20 Trust portfolio is selected by implementing the
following investment strategy. Beginning with the MSCIEAFESM Index, all stocks
are screened for positive one- and three-year sales and earnings growth rates
and three years of consecutive dividend increases. The remaining stocks are
ranked highest to lowest by market capitalization and only the top 75% are
retained. The remaining stocks (the "EAFE Subset") are ranked by dividend yield
and the twenty highest dividend yielding stocks are selected for the Trust
portfolio.
The publishers of the indexes have not participated in any way in the
creation of the Trusts or in the selection of stocks included in the Trusts and
have not approved any information herein relating thereto. With the exception of
the MSCI USA Index and MSCIEAFESM Index, the publishers of these indexes have
not granted to the Trusts or the Sponsor a license to use the indexes and are
not affiliated with the Sponsor.
Each Trust portfolio is selected by implementing the Trust strategy as of the
close of business three business days prior to the Initial Date of Deposit (the
"Selection Time"). In the case of securities traded on a United States
securities exchange, the dividend yield is computed by annualizing the last
dividend declared and dividing the result by the market value at the Selection
Time. In the case of securities traded on a foreign securities exchange, the
dividend yield is computed by adding the most recent interim and final dividends
declared and dividing the result by the market value at the Selection Time.
The Trusts seek to achieve better performance than the related indexes
through similar investment strategies. Investment in a number of companies
having high dividends relative to their stock prices (because their stock prices
may be undervalued) is designed to increase the potential for higher returns
over time. The Trust investment strategies are designed to be implemented on an
annual basis. Investors who hold Units through Trust termination may have
investment results that differ significantly from a Unit investment that is
reinvested into a new trust each year. Investors should note that the U.S.
federal income tax rate for certain capital gains for investments held for more
than 18 months is currently 20% (10% in the case of certain taxpayers in the
lowest federal tax bracket). Unitholders who elect to hold their investment
through Trust termination may qualify for this treatment if any capital gains
are realized. Unitholders who make no election at the first Special Redemption
Date and Unitholders who elect to reinvest into a new trust at the first Special
Redemption Date will not qualify for this treatment but will generally be
subject to a maximum federal capital gains tax rate of 28% if any capital gains
are realized. See "Taxation".
Investors should note that the above criteria were applied to the Securities
for inclusion in the Trusts as of three business days prior to the Initial Date
of Deposit. Subsequent to this date, the Securities may no longer be included in
an index or meet the above criteria. Should a Security no longer be included in
these indexes or meet the selection criteria, the Security will not as a result
thereof be removed from its Trust portfolio.
RISK FACTORS
- --------------------------------------------------------------------------------
PRICE VOLATILITY. The Trusts invest in common stocks of U.S. and foreign
companies. The value of Units will fluctuate with the value of these stocks and
may be more or less than the price you originally paid for your Units. The
market value of common stocks sometimes moves up or down rapidly and
unpredictably. Because the Trusts are unmanaged, the Trustee will not sell
stocks in response to market fluctuations as is common in managed investments.
In addition, because some Trusts hold a relatively small number of stocks, you
may encounter greater market risk than in a more diversified investment. As with
any investment, we cannot guarantee that the performance of a Trust will be
positive over any period of time.
DIVIDENDS. Common stocks represent ownership interests in the issuers and are
not obligations of the issuers. Accordingly, common stockholders have a right to
receive dividends only after the company has provided for payment of its
creditors, bondholders and preferred stockholders. Common stocks do not assure
dividend payments. Dividends are paid only when declared by an issuer's board of
directors and the amount of any dividend may vary over time.
FOREIGN STOCKS. Because the EAFEStrategic 20 Trust invests in foreign common
stocks, this Trust involves additional risks that differ from an investment in
domestic stocks. These risks include the risk of losses due to future political
and economic developments, international trade conditions, foreign withholding
taxes and restrictions on foreign investments and exchange of securities. This
Trust also involves the risk that fluctuations in exchange rates between the
U.S. dollar and foreign currencies may negatively affect the value of the
stocks. The Trust involves the risk that information about the stocks is not
publicly available or is inaccurate due to the absence of uniform accounting and
financial reporting standards. In addition, some foreign securities markets are
less liquid than U.S. markets. This could cause the Trust to buy stocks at a
higher price or sell stocks at a lower price than would be the case in a highly
liquid market. Foreign securities markets are often more volatile and involve
higher trading costs than U.S. markets, and foreign companies, securities
markets and brokers are also generally not subject to the same level of
supervision and regulation as in the U.S.
SPECIAL REDEMPTION. The Trustee will redeem your Units on June 13, 1999
unless you elect in writing to remain invested in your Trust through June 13,
2000. If you do not make an election, your investment will terminate and you
will receive a cash distribution of your portion of the Trust's assets. This
process could cause the Trust to terminate before June 13, 2000. Accordingly,
your investment may terminate on June 13, 1999 even though you elected to hold
Units through Trust termination.
PUBLIC OFFERING
- --------------------------------------------------------------------------------
GENERAL. Units are offered at the Public Offering Price which includes the
underlying value of the Securities, the initial sales charge, and cash, if any,
in the Income and Capital Accounts. The initial sales charge for a Traditional
Trust is 2.75% of the Public Offering Price. No deferred sales charge is imposed
on Traditional Trust Units during the first year. The initial sales charge for
the EAFEStrategic 20 Trust is equal to the difference between the total first
year sales charge (2.95% of the Public Offering Price) and the deferred sales
charge imposed prior to the first Special Redemption Date ($0.195 per Unit).
Unitholders of this Trust are subject to a deferred sales charge of $0.195 per
Unit during the first year. The initial sales charge for all other Trusts is
equal to the difference between the total first year sales charge (2.75% of the
Public Offering Price) and the deferred sales charge imposed prior to the first
Special Redemption Date ($0.175 per Unit). Unitholders of these Trusts are
subject to a deferred sales charge of $0.175 per Unit during the first year. In
addition, Unitholders of all Trusts who elect to hold Units after the first
Special Redemption Date will be subject to a deferred sales charge during the
second year. This deferred sales charge is equal to $0.17 per Unit for the
EAFEStrategic 20 Trust and $0.15 per Unit for all other Trusts. The first and
second year deferred sales charges are assessed as described in notes (2) and
(3) to the "Fee Table". If any deferred sales charge payment date is not a
business day, the payment will be charged on the next business day. 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 total maximum sales charge assessed to each Unitholder prior to
the first Special Redemption Date is 2.95% of the Public Offering Price (3.040%
of the aggregate value of the Securities less the deferred sales charge) for the
EAFEStrategic 20 Trust and 2.75% of the Public Offering Price (2.828% of the
aggregate value of the Securities less any deferred sales charge) for all other
Trusts. The total sales charge assessed to each Unitholder who elects to hold
Units through Trust termination is 4.65% of the Public Offering Price (4.877% of
the aggregate value of the Securities less the deferred sales charge) for the
EAFEStrategic 20 Trust and 4.25% of the Public Offering Price (4.439% of the
aggregate value of the Securities less any deferred sales charge) for all other
Trusts. The initial offering period sales charge is reduced as follows:
AGGREGATE
DOLLAR AMOUNT SALES CHARGE
OF UNITS PURCHASED* REDUCTION
- --------------------- ----------------
$50,000 - $99,999 0.25%
$100,000 - $149,999 0.50
$150,000 - $999,999 0.85
$1,000,000 or more 1.75
- ---------------
*The breakpoint sales charges are also applied on a Unit 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.
Any sales charge reduction is the responsibility of the selling broker,
dealer or agent. An investor may aggregate purchases of Units of the Trusts for
purposes of qualifying for volume purchase discounts listed above. The reduced
sales charge structure will also 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 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 the amount of
such reduction. To determine the applicable sales charge reduction 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 to be additional purchases by the purchaser for
the purposes of calculating the applicable sales charge. 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 less the concession the Sponsor typically allows to brokers and
dealers for purchases 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.
A purchaser desiring to purchase during a 13 month period $500,000 or more of
any combination of series of Van Kampen American Capital unit investment trusts
may qualify for a reduced sales charge by signing a nonbinding Letter of Intent
with any single broker-dealer. After signing a Letter of Intent, at the date
total purchases, less redemptions, of units of any combination of series of Van
Kampen American Capital unit investment trusts by a purchaser (including units
purchased in the name of the spouse of a purchaser or in the name of a child of
such purchaser under 21 years of age) exceed $500,000, the selling
broker-dealer, bank or other will credit the unitholder with cash as a
retroactive reduction of the sales charge on such units equal to the amount
which would have been paid for the total aggregated sales amount. If a purchase
does not complete the required purchases under the Letter of Intent within the
13 month period, no such retroactive sales charge reduction shall be made.
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 all Trusts at the Public Offering
Price per Unit less 1%.
During the initial offering period of the Trusts, unitholders of unaffiliated
unit investment trusts having an investment strategy similar to the investment
strategy of the Trusts may utilize proceeds received upon termination or upon
redemption immediately preceding termination of such unaffiliated trust to
purchase Units of a Trust at the Public Offering Price per Unit less 1%.
Employees, officers and directors (including their spouses, children,
grandchildren, parents, grandparents, siblings, mothers-in-law, fathers-in-law,
sons-in-law, daughters-in-law, and trustees, custodians or fiduciaries for the
benefit of such persons) of the 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.
The minimum purchase is 100 Units (25 Units for retirement accounts) but may
vary by selling firm. However, 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.
OFFERING PRICE. The Public Offering Price of Units will vary from the amounts
stated under "Summary of Essential Financial Information" in accordance with
fluctuations in the prices of the underlying Securities in the Trusts. The
initial price of the Securities was determined by Interactive Data Corporation,
a firm regularly engaged in the business of evaluating, quoting or appraising
comparable securities. The Evaluator will generally determine the value of the
Securities as of the Evaluation Time on each business day and will adjust the
Public Offering Price of Units accordingly. This Public Offering Price will be
effective for all orders received prior to the Evaluation Time on each business
day. The Evaluation Time is the close of the New York Stock Exchange on each
Trust business 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,
will be held until the next determination of price. The term "business day", as
used herein and under "Rights of Unitholders--Redemption of Units", excludes
Saturdays, Sundays and holidays observed by the New York Stock Exchange. For the
EAFE Strategic 20 Trust, the term "business day" also excludes any day on which
more than 33% of the Securities are not traded on their principal trading
exchange due to a customary business holiday on that exchange.
The aggregate underlying value of the Securities during the initial offering
period is determined on each business day by the Evaluator in the following
manner: If the Securities are listed on a national or foreign securities
exchange, this evaluation is generally based on the closing sale prices on that
exchange (unless it is determined that these prices are inappropriate as a basis
for valuation) or, if there is no closing sale price on that exchange, at the
closing ask prices. If the Securities are not listed on a national or foreign
securities exchange or, if so listed and the principal market therefor 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
Securities on the ask side of the market or (c) by any combination of the above.
The value of any foreign securities is based on the offering side currency
exchange rate in U.S. dollars as of the Evaluation Time. The value of the
Securities for purposes of secondary market transactions and redemptions is
described under "Rights of Unitholders--Redemption of Units".
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities but rather the
entire pool of Securities in a Trust, taken as a whole, which are represented by
the Units.
UNIT DISTRIBUTION. Units will be distributed to the public by the Sponsor,
broker-dealers and others at the Public Offering Price. 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 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 the concessions or agency
commissions represents amounts paid by the Sponsor out of its own assets as
additional compensation.
INITIAL OFFERING
AGGREGATE PERIOD CONCESSION
DOLLAR AMOUNT OF OR AGENCY
UNITS PURCHASED* COMMISSION PER UNIT
- ------------------- ----------------------
$10 - $49,999 2.10%
$50,000 - $99,999 1.85
$100,000 - $149,999 1.60
$150,000 - $999,999 1.25
$1,000,000 or more 0.50
- ---------------
*The breakpoint concessions or agency commissions are also applied on a Unit
basis utilizing a breakpoint equivalent in the above table of $10 per Unit and
will be applied on whichever basis is more favorable to the broker, dealer or
agent.
In addition to the amounts above, during the initial offering period any firm
that distributes 500,000 - 999,999 Units of the Strategic Picks Trust will
receive additional compensation of $.0025 per Unit; any firm that distributes
1,000,000 - 1,999,999 Units of such Trust will receive additional compensation
of $.005 per Unit; any firm that distributes 2,000,000 - 2,999,999 Units of such
Trust will receive additional compensation of $.01 per Unit; any firm that
distributes 3,000,000 - 3,999,999 Units of such Trust will receive additional
compensation of $.015 per Unit; any firm that distributes 4,000,000 - 4,999,999
Units of such Trust will receive additional compensation of $.02 per Unit; any
firm that distributes 5,000,000 Units or more of such Trust will receive
additional compensation of $.025 per Unit. This additional compensation will be
paid by the Sponsor out of its own assets at the end of the initial offering
period.
Any discount provided to investors will be borne by the selling dealer or
agent as indicated under "General" above. For Rollover transactions the total
concession or agency commission will amount to 1.1% per Unit (or such lesser
amount resulting from discounts). For all secondary market transactions the
total concession or agency commission will amount to 2.1% per Unit. In addition
to the amounts set forth above, for transactions involving Unitholders who elect
to hold Units after the first Special Redemption Date, the total concession or
agency commission will include an additional 1% per Unit which will be paid to
the broker, dealer or agent subsequent to the first Special Redemption Date.
Notwithstanding anything to the contrary herein, in no case shall 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 exceed the total sales charge applicable to such
transaction. 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.
Broker-dealers of the Trusts, banks and/or others may be eligible to
participate in a program in which such firms receive from the Sponsor a nominal
award for each of their representatives who have sold a minimum number of units
of unit investment trusts created by the Sponsor during a specified time period.
In addition, at various times the Sponsor may implement other programs under
which the sales forces of brokers, dealers, banks and/or others may be eligible
to win other nominal awards for certain sales efforts, or under which the
Sponsor will reallow to such brokers, dealers, banks and/or others that sponsor
sales contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs sponsored 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 pay 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 the assets of any Trust. These programs will not change the price Unitholders
pay for their Units or the amount that a Trust will receive from the Units sold.
SPONSOR COMPENSATION. The Sponsor will receive a gross sales commission equal
to the total sales charge applicable to each transaction. Any sales charge
discount provided to investors will be borne by the selling dealer or agent. In
addition, the Sponsor will realize a profit or loss as a result of the
difference between the price paid for the Securities by the Sponsor and the cost
of the Securities to each Trust 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
realize profit or loss as a result of the possible fluctuations in the market
value of the Securities, since all proceeds received from purchasers of Units
are retained by the Sponsor. In maintaining a secondary market, the Sponsor will
realize profits or 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) or from a redemption of repurchased Units
at a price above or below the purchase price. 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.
MARKET FOR UNITS. Although it is not obligated to do so, the Sponsor
currently intends to maintain a market for Units and to purchase Units at the
secondary market repurchase price (which is described under "Right of
Unitholders--Redemption of Units"). The Sponsor may discontinue purchases of
Units or discontinue purchases at this price at any time. The Sponsor intends to
maintain a secondary market for Units only during the first six months following
the Initial Date of Deposit. In the event that a secondary market is not
maintained, a Unitholder will be able to dispose of Units by tendering them to
the Trustee for redemption at the Redemption Price. See "Rights of
Unitholders--Redemption of Units". Unitholders should contact their broker to
determine the best price for Units in the secondary market. Units sold prior to
the time the entire deferred sales charge has been collected will be assessed
the amount of any 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 remaining second year deferred sales charge). The Trustee will notify the
Sponsor of any tendered of Units for redemption. If the Sponsor's bid in the
secondary market equals or exceeds the Redemption Price per Unit, it may
purchase the Units not later than the day on which Units would have been
redeemed by the Trustee. The Sponsor may sell repurchased Units at the secondary
market Public Offering Price per Unit.
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 minimum
purchase for these accounts is reduced to 25 Units but may vary by selling firm.
The purchase of Units may be limited by the plans' provisions and does not
itself establish such plans.
RIGHTS OF UNITHOLDERS
- --------------------------------------------------------------------------------
DISTRIBUTIONS. Dividends and any net proceeds from the sale of Securities
received by a Trust will be distributed to Unitholders on each Distribution Date
to Unitholders of record on the preceding Record Date. These dates are listed
under "Summary of Essential Financial Information". A person becomes a
Unitholder of record on the date of settlement (generally three business days
after Units are ordered). Unitholders may elect to receive distributions in cash
or to have distributions reinvested into additional Units. Distributions may
also be reinvested into Van Kampen American Capital or Morgan Stanley mutual
funds. See "Rights of Unitholders--Reinvestment Option".
Dividends received by a Trust are credited to the Income Account of the
Trust. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, etc.) are credited to the Capital Account. Proceeds received on the
sale of any Securities, to the extent not used to meet redemptions of Units or
pay deferred sales charges, fees or expenses, will be distributed to
Unitholders. Proceeds received from the disposition of any 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. Any
distribution to Unitholders consists of each Unitholder's pro rata share of the
available cash in the Income and Capital Accounts as of the related Record Date.
REINVESTMENT OPTION. Unitholders may have distributions 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) through two options. Brokers and dealers can use the
Dividend Reinvestment Service through Depository Trust Company or purchase the
Automatic Reinvestment Option CUSIP. Unitholders will be subject to the
remaining deferred sales charge payments due on Units. To participate in this
reinvestment option, a Unitholder must file with the Trustee a written notice of
election, together with any certificate representing Units and other
documentation that the Trustee may then require, at least five days prior to the
related Record Date. A Unitholder's election will apply to all Units owned by
the Unitholder and will remain in effect until changed by the Unitholder. If
Units are unavailable for reinvestment, distributions will be paid in cash.
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
Distribution Date.
In addition, under the Guaranteed Reinvestment Option Unitholders may elect
to have distributions automatically reinvested in certain Van Kampen American
Capital or Morgan Stanley mutual funds (the "Reinvestment Funds"). Each
Reinvestment Fund has investment objectives which differ from those of the
Trusts. The prospectus relating to each Reinvestment Fund describes its
investment policies and how to begin reinvestment. A Unitholder may obtain a
prospectus for the Reinvestment Funds from the Sponsor. Purchases of shares of a
Reinvestment Fund will be made at a net asset value computed on the Distribution
Date. Unitholders with an existing Guaranteed Reinvestment Option account
(whereby a sales charge is imposed on distribution reinvestments) may transfer
their existing account into a new account which allows purchases of Reinvestment
Fund shares at net asset value.
A participant may elect to terminate his or her reinvestment plan and receive
future distributions in cash by notifying the Trustee in writing no later than
five days before a distribution date. The Sponsor, each Reinvestment Fund, and
its investment adviser shall have the right to suspend or terminate these
reinvestment plans at any time.
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. Certificates must be tendered to the
Trustee, duly endorsed or accompanied by proper instruments of transfer with
signature guaranteed (or by providing satisfactory indemnity in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. On the seventh day following the tender, the
Unitholder will be entitled to receive in cash an amount for each Unit equal to
the Redemption Price per Unit next computed on the date of tender. 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 by the Trustee after the Evaluation
Time or on a day which is not a Trust business day, the date of tender is deemed
to be the next business day.
Unitholders tendering 1,000 or more Units of a Trust for redemption may
request an in kind distribution of Securities equal to the Redemption Price per
Unit on the date of tender. The EAFE Strategic 20 Trust does not offer in kind
distributions because its portfolio securities are held in foreign markets. An
in kind distribution 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
broker-dealer at Depository Trust Company. Amounts representing fractional
shares will be distributed in cash. The Trustee may adjust the number of shares
of any Security included in a Unitholder's in kind distribution to facilitate
the distribution of whole shares.
The Trustee may sell Securities to satisfy Unit redemptions. To the extent
that Securities are redeemed in kind or sold, the size of a Trust will be, and
the diversity of a Trust may be, reduced. Sales may be required at a time when
Securities would not otherwise be sold and may result in lower prices than might
otherwise be realized. The price received upon redemption may be more or less
than the amount paid by the Unitholder depending on the value of the Securities
at the time of redemption. Special federal income tax consequences will result
if a Unitholder requests an in kind distribution. See "Taxation".
The Redemption Price per Unit and the secondary market repurchase price per
Unit are equal to the pro rata share of each Unit in each Trust determined on
the basis of (i) the cash on hand in the Trust, (ii) the value of the Securities
in the Trust and (iii) dividends receivable on the Securities in the Trust
trading ex-dividend as of the date of computation, less (a) amounts representing
taxes or other governmental charges payable out of the Trust, (b) the accrued
expenses of the Trust and (c) any unpaid deferred sales charge payments
(however, Unitholders who terminate their investment on or prior to the first
Special Redemption Date will not be assessed the remaining second year deferred
sales charge). For these purposes, the Evaluator may determine the value of the
Securities in the following manner: If the Securities are listed on a national
or foreign securities exchange, this evaluation is generally based on the
closing sale prices on that exchange (unless it is determined that these prices
are inappropriate as a basis for valuation) or, if there is no closing sale
price on that exchange, at the closing bid prices. If the Securities are not so
listed or, if so listed and the principal market therefore is other than on the
exchange, the evaluation may be based on the current bid price on the
over-the-counter market. If current bid prices are unavailable or inappropriate,
the evaluation may be determined (a) on the basis of current bid prices for
comparable securities, (b) by appraising the Securities on the bid side of the
market or (c) by any combination of the above. For purposes of redemptions and
secondary market transactions, the value of any foreign securities is based on
the bid side currency exchange rate in U.S. dollars as of the Evaluation Time.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the SEC 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 other periods as the SEC may permit.
SPECIAL REDEMPTION AND ROLLOVER. The Trust strategies are designed to be
followed on an annual basis. The Trusts, however, offer investors the
flexibility to follow the strategies on an annual or a biennial basis.
Accordingly, Unitholders may follow the strategies by electing to participate in
a "Rollover" on either Special Redemption Date. The Sponsor currently intends
that a subsequent series of each Trust will be available for a Rollover on each
Special Redemption Date.
On the first Rollover Notification Date Unitholders will have the option to
(1) participate in the first Rollover and have their Units reinvested into a
subsequent trust series, (2) receive an in kind distribution of Securities (if
applicable) or (3) continue to hold Units through the Mandatory Termination
Date. An investment in Units will be redeemed on the first Special Redemption
Date unless a Unitholder elects in writing to remain invested in their Trust
through the Mandatory Termination Date. Unitholders who do not make an election
at least five days prior to the first Special Redemption Date will receive a
cash distribution equal to the Redemption Price per Unit on that date as
described under "Rights of Unitholders--Redemption of Units". Unitholders who
elect to remain invested in a Trust after the first Special Redemption Date will
not receive new Units but will continue to hold the same Units and remain
invested in the same Trust until the Mandatory Termination Date or until the
Unitholder redeems the Units.
If a Unitholder elects to participate in a Rollover, their Units will be
redeemed on the related Special Redemption Date. As the redemption proceeds
become available, the proceeds (including dividends) will be invested in a new
trust series as directed by the Unitholder at the public offering price for the
new trust. The Trustee will attempt to sell Securities to satisfy the redemption
as quickly as practicable on each Special Redemption Date. It is not anticipated
that the sale period will be longer than one day, however, certain factors could
affect the ability to sell the Securities and could impact the length of the
sale period. The liquidity of any Security depends on the daily trading volume
of the Security and the amount available for redemption and reinvestment on any
day.
The Sponsor intends to make subsequent trust series available for sale on
each Special Redemption Date. Of course, there can be no guarantee that a
subsequent trust or sufficient units will be available or that any subsequent
trusts will offer the same investment strategies or objectives as the current
Trusts. There can be no assurance that a Rollover will avoid any negative market
price consequences resulting from trading large volumes of securities. Market
price trends may make it advantageous to sell or buy securities more quickly or
more slowly than permitted by the Trust procedures. The Sponsor may, in its sole
discretion, modify a Rollover or stop creating units of a trust at any time
regardless of whether all proceeds of Unitholders have been reinvested in a
Rollover. If the Sponsor decides not to offer a subsequent series, Unitholders
will be notified prior to the related Special Redemption Date. Cash which has
not been reinvested in a Rollover will be distributed to Unitholders shortly
after the related Special Redemption Date. Rollover participants may receive
taxable dividends or realize taxable capital gains which are reinvested in
connection with a Rollover but may not be entitled to a deduction for capital
losses due to the "wash sale" tax rules. Due to the reinvestment in a subsequent
trust, no cash will be distributed to pay any taxes. See "Taxation".
CERTIFICATES. Ownership of Units is evidenced by certificates unless a
Unitholder 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 in certificate form, by presentation of the
certificate to the Trustee properly endorsed or accompanied by a written
instrument or instruments of transfer. A Unitholder must sign the written
request, and certificate or transfer instrument, exactly as his name appears on
the records of the Trustee and on the face of any certificate with the signature
guaranteed by a participant in the Securities Transfer Agents Medallion Program
("STAMP") or a signature guarantee program 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. Fractional certificates
will not be issued. 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 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.
REPORTS PROVIDED. Unitholders will receive a statement of dividends and other
amounts received by a Trust for each distribution. Within a reasonable time
after the end of each year, each person who was a Unitholder during that year
will receive a statement describing dividends and capital received, actual Trust
distributions, Trust expenses, a list of the Securities and other Trust
information. Unitholders may obtain the Evaluator's evaluations of the
Securities upon request.
TRUST ADMINISTRATION
- --------------------------------------------------------------------------------
PORTFOLIO ADMINISTRATION. The Trusts are not managed funds and, except as
provided in the Trust Agreement, Securities generally will not be sold or
replaced. The Sponsor may, however, direct that Securities be sold in certain
limited circumstances to protect the Trust based on advice from the Supervisor.
These situations may include events such as the issuer having defaulted on
payment of any of its outstanding obligations or the price of a Security has
declined to such an extent or other credit factors exist so that in the opinion
of the Sponsor retention of the Security would be detrimental to the Trust. In
addition, the Trustee may sell Securities to redeem Units or pay Trust expenses
or deferred sales charges. The Trustee must reject any offer for securities or
property in exchange for the Securities. If securities or property are
nonetheless acquired by a Trust, the Sponsor may direct the Trustee to sell the
securities or property and distribute the proceeds to Unitholders or to accept
the securities or property for deposit in the Trust. Should any contract for the
purchase of any of the Securities fail, the Sponsor will (unless substantially
all of the moneys held in the Trust to cover the purchase are reinvested in
substitute Securities in accordance with the Trust Agreement) refund the cash
and sales charge attributable to the failed contract to all Unitholders on or
before the next distribution date.
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
Securities in a Trust. To the extent this is not practicable, the composition
and diversity of the Securities in the 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 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 Trusts, 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 is sponsors.
Pursuant to an exemptive order, each terminating Trust is permitted to sell
Securities to a new trust series if those Securities meet the investment
strategy of the new trust. The exemption enables 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 Sponsor.
AMENDMENT OF THE TRUST AGREEMENT. The Trustee and the Sponsor may amend the
Trust Agreement without the consent of Unitholders to correct any provision
which may be defective or to make other provisions that will not adversely
affect Unitholders (as determined in good faith by the Sponsor and the Trustee).
The Trust Agreement may not be amended to increase the number of Units or permit
acquisition of securities in addition to or substitution for the Securities
(except as provided in the Trust Agreement). The Trustee will notify Unitholders
of any amendment.
TERMINATION. Each Trust will terminate on the Mandatory Termination Date or
upon the sale or other disposition of the last Security held in the Trust. An
investment in Units, however, will be redeemed on the first Special Redemption
Date unless the Unitholder elects in writing to remain invested through the
Mandatory Termination Date. A Trust may be terminated at any time with consent
of Unitholders representing two-thirds of the outstanding Units or by the
Trustee when the value of the Trust is less than $500,000 ($3,000,000 if the
value of the Trust has exceeded $15,000,000) (the "Minimum Termination Value").
Unitholders will be notified of any termination. The Trustee will begin to sell
Securities in connection with a Trust termination on the Mandatory Termination
Date. Approximately thirty days before this date, the Trustee will notify
Unitholders of the termination and provide a form enabling qualified Unitholders
to elect an in kind distribution of Securities. See "Rights of
Unitholders--Redemption of Units". This form must be returned at least five
business days prior to the Mandatory Termination Date. Unitholders will receive
a final cash distribution within a reasonable time after the Mandatory
Termination Date (unless the Unitholder has elected an in kind distribution or
is a participant in the final Rollover). All distributions will be net of Trust
expenses and costs. Unitholders will receive a final distribution statement
following termination. The Information Supplement contains further information
regarding termination of the Trusts. See "Additional Information".
LIMITATIONS ON LIABILITIES. The Sponsor, Evaluator, Supervisor and Trustee
are under no liability 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 is 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 is not be liable for any action taken by it in good faith under
the Trust Agreement. The Trustee is not liable for any taxes or other
governmental charges imposed on the Securities, on it as Trustee under the Trust
Agreement or on 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
and Supervisor may rely on any evaluation furnished by the Evaluator and have no
responsibility for the accuracy thereof. Determinations by the Evaluator shall
be made in good faith upon the basis of the best information available to it.
SPONSOR. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect subsidiary
of Morgan Stanley Dean Witter & Co. 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. As of
November 30, 1997, the total stockholders' equity of Van Kampen American Capital
Distributors, Inc. was $132,381,000 (audited). The Information Supplement
contains additional information about the Sponsor.
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. Additional information
regarding the Trustee is set forth in the Information Supplement, including the
Trustee's qualifications and duties, its ability to resign, the effect of a
merger involving the Trustee and the Sponsor's ability to remove and replace the
Trustee. See "Additional Information".
PERFORMANCE INFORMATION. The Sponsor may from time to time in its advertising
and sales materials compare the then current estimated returns on the Trusts and
returns over specified time periods on other similar Van Kampen American Capital
trusts or investment strategies utilized by the Trusts (which may show
performance net of expenses and charges which the Trusts would have charged)
with returns on other taxable investments such as the common stocks comprising
the Dow Jones Industrial Average, the S&P 500, other investment indices,
corporate or U.S. government bonds, bank CDs, money market accounts or money
market funds, or with performance data from Lipper Analytical Services, Inc.,
Morningstar Publications, Inc. or various publications, each of which has
characteristics that may differ from those of the Trusts. Information on
percentage changes in the dollar value of Units may be included from time to
time in advertisements, sales literature, reports and other information
furnished to current or prospective Unitholders. Total return figures may not be
averaged and may not reflect deduction of the sales charge, which would decrease
return. No provision is made for any income taxes payable. Past performance may
not be indicative of future results. The Trust portfolios are not managed and
Unit price and return fluctuate with the value of common stocks in the
portfolios, so there may be a gain or loss when Units are sold. As with other
performance data, performance comparisons should not be considered
representative of the Trust's relative performance for any future period.
TAXATION
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FEDERAL TAXATION
General. The following is a general discussion of certain of the federal
income tax consequences of the purchase, ownership and disposition of the Units.
The summary is limited to investors who hold the Units as capital assets
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (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 a
Trust.
For purposes of the following discussion and opinions, 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. Each 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 a Trust under the Code;
and the income of each 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 Security when such income is
considered to be received by a 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 received by a
Trust regardless of whether such dividends are used to pay a portion of any
deferred sales charge imposed. Unitholders will be taxed in this manner
regardless of whether distributions from a 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 a 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 from a Trust 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
a 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 a Trust.
Unitholders should consult their own tax advisers with regard to the calculation
of basis. For federal income tax purposes, a Unitholder's pro rata portion of
the dividends, as defined by Section 316 of the Code, paid with respect to a
Security held by a Trust is taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits". A Unitholder's pro
rata portion of dividends paid on such Security which exceed such current and
accumulated earnings and profits will first reduce a Unitholder's tax basis in
such Security, and to the extent that such dividends exceed a Unitholder's tax
basis in such Security shall generally be treated as capital gain. In general,
the holding period for such capital gain will be determined by the period of
time a Unitholder has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by a 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 a 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 series of the Trusts (the "New Fund") will generally be disallowed with
respect to the disposition of any Securities pursuant to such exchange to the
extent that such Unitholder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into account such
Unitholder's deemed ownership of the securities underlying the Units in the New
Fund in the manner described above, if such substantially identical securities
were acquired within a period beginning 30 days before and ending 30 days after
such disposition. However, any gains incurred in connection with such an
exchange by a Rollover Unitholder would be recognized. Unitholders should
consult their tax advisers regarding the recognition of gains and losses for
federal income tax purposes.
Deferred Sales Charge. Generally, the tax basis of a Unitholder includes
sales charges, and such charges are not deductible. A portion of the sales
charge for the Trusts 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 any deferred sales
charge imposed.
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 a 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.
To the extent dividends received by a Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by a Trust is deductible by the
Unitholder to the same extent as though the expense had been paid directly by
him. It should be noted that as a result of the Tax Reform Act of 1986, certain
miscellaneous itemized deductions, such as investment expenses, tax return
preparation fees and employee business expenses will be deductible by an
individual only to the extent they exceed 2% of such individual's adjusted gross
income. Unitholders may be required to treat some or all of the expenses of a
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by a Trust
or Disposition of Units. As discussed above, a Unitholder may recognize taxable
gain (or loss) when a Security is disposed of by a Trust or if the Unitholder
disposes of a Unit (although losses incurred by Rollover Unitholders may be
subject to disallowance, as discussed above). The Taxpayer Relief Act of 1997
(the "1997 Act") provides that for taxpayers other than corporations, net
capital gain (which is defined as net long-term capital gain over net short-term
capital loss for the taxable year) 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. The date on which a Unit is acquired (i.e., the "trade date") is
excluded for purposes of determining the holding period of the Units. 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 at 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. 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 is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust involved including his
pro rata portion of all Securities represented by a Unit. 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
national principal contracts, futures or forward contracts, or similar
transactions) as constructive sales for purposes of recognition of gain (but not
loss) and for purposes of determining the holding period. Unitholders should
consult their own tax advisers with regard to any such constructive sales rules.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of a 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 of the U.S.-traded Securities in a Trust. A
Unitholder may also under certain circumstances request an In Kind Distribution
of the U.S.-traded Securities in a Trust upon the termination of such Trust. A
Unitholder will receive cash representing his pro rata portion of the foreign
Securities in a 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 a Trust, a Unitholder is
considered as owning a pro rata portion of each of such 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 a Trust will depend on whether or not a
Unitholder receives cash in addition to Securities. A "Security" for this
purpose is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
Securities in exchange for his or her pro rata portion in the Securities held by
a Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a U.S.-traded Security or for a foreign Security held by a
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 U.S.-traded Security or such foreign
Security held by such Trust.
Because each 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 such 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 such Trust. Unitholders who request an In Kind Distribution are advised
to consult their tax advisers in this regard.
Rollover Unitholders. As discussed in "Rights of Unitholders--Special
Redemption and Rollover in New Fund," a Unitholder may elect to become a
Rollover Unitholder. To the extent a Rollover Unitholder exchanges his Units for
Units of the New Fund in a taxable transaction, such Unitholder will recognize
gains, if any, but generally will not be entitled to a deduction for any losses
recognized upon the disposition of any Securities pursuant to such exchange to
the extent that such Unitholder is considered the owner of substantially
identical securities under the wash sale provisions of the Code taking into
account such Unitholder's deemed ownership of the securities underlying the
Units in the New Fund in the manner described above, if such substantially
identical securities were acquired within a period beginning 30 days before and
ending 30 days after such disposition 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 a
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 a 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.
Other Matters. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by a Trust to such
Unitholder (including amounts received upon the redemption of Units) will be
subject to back-up withholding. Distributions by a Trust (other than those that
are not treated as United States source income, if any) will generally be
subject to United States income taxation and withholding in the case of Units
held by non-resident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisers.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unitholders and derived from dividends of foreign corporations will not be
subject to U.S. withholding tax provided that less than 25 percent of the gross
income of the foreign corporation for a three-year period ending with the close
of its taxable year preceding payment was not effectively connected to the
conduct of a trade or business within the United States. In addition, such
earnings may be exempt from U.S. withholding pursuant to a specific treaty
between the United States and a foreign country. Non-U.S. Unitholders should
consult their own tax advisers regarding the imposition of U.S. withholding on
distributions from a Trust.
It should be noted that payments to the Trusts of dividends on Securities
that are attributable to foreign corporations may be subject to foreign
withholding taxes and Unitholders should consult their tax advisers regarding
the potential tax consequences relating to the payment of any such withholding
taxes by the Trusts. Any dividends withheld as a result thereof will
nevertheless be treated as income to the Unitholders. Because, under the grantor
trust rules, an investor is deemed to have paid directly his share of foreign
taxes that have been paid or accrued, if any, an investor may be entitled to a
foreign tax credit or deduction for United States tax purposes with respect to
such taxes. The 1997 Tax Act imposes a required holding period for such credits.
Investors should consult their tax advisers with respect to foreign withholding
taxes and foreign tax credits.
At the termination of a Trust, the Trustee will furnish to each Unitholder of
such Trust a statement containing information relating to the dividends received
by such Trust on the Securities, the gross proceeds received by such Trust from
the disposition of any Security (resulting from redemption or the sale of any
Security), and the fees and expenses paid by such 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 Fund for New York tax matters, each
Trust is not an association taxable as a corporation and the income of the
Trusts 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
in one of the Trusts that (a) is (i) for United States federal income tax
purposes a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source or (b) does not qualify as a U.S. Unitholder in
paragraph (a) but whose income from a Unit is effectively connected with such
Unitholder's conduct of a United States trade or business. The term also
includes certain former citizens of the United States whose income and gain on
the Units will be taxable. Unitholders should consult their tax advisers
regarding potential state or local taxation with respect to the Units.
TRUST OPERATING EXPENSES
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COMPENSATION OF SPONSOR, SUPERVISOR AND EVALUATOR. The Sponsor will not
receive any fees in connection with its activities relating to the Trusts.
However, the Supervisor and Evaluator, which are affiliates of the Sponsor, will
each receive the annual fee for portfolio supervisory and evaluation services
set forth in the "Fee Table". These fees may exceed the actual costs of
providing these services to the Trusts but at no time will the total amount
received for supervisory and evaluation services rendered to all Van Kampen
American Capital unit investment trusts in any calendar year exceed the
aggregate cost of providing these services in that year.
TRUSTEE'S FEE. For its services the Trustee will receive the fee from each
Trust set forth in the "Fee Table" (which includes the estimated amount of
miscellaneous Trust expenses). The Trustee benefits to the extent there are
funds 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 each Trust is
expected to result from the use of these funds.
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 one year. 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 such 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 a Trust and the
rights and interests of Unitholders, (f) indemnification of the Trustee for any
loss, liability or expenses incurred in the administration of a Trust without
negligence, bad faith or wilful misconduct on its part, (g) foreign custodial
and transaction fees, (h) costs associated with liquidating the securities held
in a Trust portfolio and (i) expenditures incurred in contacting Unitholders
upon termination of a Trust.
GENERAL. During 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 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 on a monthly basis.
The deferred sales charges, fees and expenses are paid out of the Capital
Account of the related Trust. When these amounts are paid by or owing to the
Trustee, they are secured by a lien on the related Trust's portfolio. It is
expected that Securities will be sold to pay these amounts which will result in
capital gains or losses to Unitholders. See "Taxation". The Supervisor's,
Evaluator's and Trustee's 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 or, if this
category is not published, in a comparable category.
OTHER MATTERS
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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 to the Trustee
and as special counsel for New York tax matters.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. The statements of condition and the
related portfolios 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.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
This Prospectus does not contain all the information set forth in the
Registration Statement filed by the Trusts with the SEC. The Information
Supplement, which has been filed with the SEC, includes more detailed
information concerning the Securities, investment risks and general information
about the Trusts. The Information Supplement may be obtained by contacting the
Trustee at (800) 856-8487 or is available along with other related materials at
the SEC's internet site (http://www.sec.gov).
TABLE OF CONTENTS
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TITLE PAGE
Summary of Essential Financial Information 2
Fee Table............................... 3
Strategic Ten Trust United States Portfolio,
June 1998 Series..................... 4
Strategic Ten Trust United States Portfolio,
June 1998 Traditional Series......... 6
Strategic Five Trust United States Portfolio,
June 1998 Series..................... 8
Strategic Five Trust United States Portfolio,
June 1998 Traditional Series......... 10
Strategic Picks Opportunity Trust,
June 1998 Series..................... 12
EAFEStrategic 20 Trust, June 1998 Series 14
Notes to Hypothetical Performance Tables 16
Notes to Portfolios..................... 16
The Securities.......................... 17
Report of Independent Certified
Public Accountants................... 21
Statements of Condition ................ 22
The Trusts.............................. A-1
Objectives and Securities Selection..... A-2
Risk Factors............................ A-3
Public Offering......................... A-3
Rights of Unitholders................... A-8
Trust Administration.................... A-11
Taxation................................ A-13
Trust Operating Expenses................ A-17
Other Matters........................... A-18
Additional Information.................. A-18
- --------------
When Units of the Trusts are no longer available this prospectus may be used as
a preliminary prospectus for a future Trust. If this prospectus is used for
future Trusts you should note the following:
The information in this prospectus is not complete with respect to future
Trust series and may be changed. No person may sell Units of future Trusts until
a registration statement is filed with the Securities and Exchange Commission
and is effective. This prospectus is not an offer to sell Units and is not
soliciting an offer to buy Units in any state where the offer or sale is not
permitted.
PROSPECTUS
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JUNE 8, 1998
STRATEGIC TEN TRUST
UNITED STATES PORTFOLIO,
JUNE 1998 SERIES
UNITED STATES PORTFOLIO,
JUNE 1998 TRADITIONAL SERIES
STRATEGIC FIVE TRUST
UNITED STATES PORTFOLIO,
JUNE 1998SERIES
UNITED STATES PORTFOLIO,
JUNE 1998 TRADITIONAL SERIES
STRATEGIC PICKS
OPPORTUNITY TRUST,
JUNE 1998SERIES
EAFESTRATEGIC 20 TRUST,
JUNE 1998 SERIES
------ A Wealth of Knowledge o Knowledge of Wealth(sm) ------
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.
<PAGE>
VAN KAMPEN AMERICAN CAPITAL
INFORMATION SUPPLEMENT
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 89
- --------------------------------------------------------------------------------
This Information Supplement provides additional information concerning the
risks and operations of the Trust which is not described in the Prospectus. This
Information Supplement should be read in conjunction with the Prospectus. This
Information Supplement is not a prospectus, does not include all of the
information that an investor should consider before investing in a Trust and may
not be used to offer or sell Units without the Prospectus. Copies of the
Prospectus can be obtained by contacting the Sponsor at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181 or by contacting your broker. This Information
Supplement is dated as of the date of the Prospectus and all capitalized terms
have been defined in the Prospectus.
TABLE OF CONTENTS
PAGE
Risk Factors 2
The Trust Strategies 3
The Indexes 5
Sponsor Information 8
Trustee Information 9
Trust Termination 10
RISK FACTORS
PRICE VOLATILITY. Because the Trusts invest in common stocks of U.S. and
foreign companies, you should understand the risks of investing in common stocks
before purchasing Units. These risks include the risk that the financial
condition of the company or the general condition of the stock market may worsen
and the value of the stocks (and therefore Units) will fall. Common stocks are
especially susceptible to general stock market movements. The value of common
stocks often rises or falls rapidly and unpredictably as market confidence and
perceptions of companies change. These perceptions are based on factors
including expectations regarding government economic policies, inflation,
interest rates, economic expansion or contraction, political climates and
economic or banking crises. The value of Units will fluctuate with the value of
the stocks in a Trust and may be more or less than the price you originally paid
for your Units. As with any investment, we cannot guarantee that the performance
of a Trust will be positive over any period of time. Because the Trusts are
unmanaged, the Trustee will not sell stocks in response to market fluctuations
as is common in managed investments. In addition, because some Trusts hold a
relatively small number of stocks, you may encounter greater market risk than in
a more diversified investment.
DIVIDENDS. Common stocks represent ownership interests in a company and are
not obligations of the company. Accordingly, common stockholders have a right to
receive payments from the company that is subordinate to the rights of
creditors, bondholders or preferred stockholders of the company. This means that
common stockholders have a right to receive dividends only if a company's board
of directors declares a dividend and the company has provided for payment of all
of its creditors, bondholders and preferred stockholders. If a company issues
additional debt securities or preferred stock, the owners of these securities
will have a claim against the company's assets before common stockholders if the
company declares bankruptcy or liquidates its assets even though the common
stock was issued first. As a result, the company may be less willing or able to
declare or pay dividends on its common stock.
FOREIGN STOCKS. Because the EAFEStrategic 20 Trust invests in foreign
common stocks, this Trust involves additional risks that differ from an
investment in domestic stocks. Investments in foreign securities may involve a
greater degree of risk than those in domestic securities. There is generally
less publicly available information about foreign companies in the form of
reports and ratings similar to those that are published about issuers in the
United States. Also, foreign issuers are generally not subject to uniform
accounting, auditing and financial reporting requirements comparable to those
applicable to United States issuers. With respect to certain foreign countries,
there is the possibility of adverse changes in investment or exchange control
regulations, expropriation, nationalization or confiscatory taxation,
limitations on the removal of funds or other assets of a Trust, political or
social instability, or diplomatic developments which could affect United States
investments in those countries. Moreover, industrial foreign economies may
differ favorably or unfavorably from the United States' economy in terms of
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. Foreign securities
markets are generally not as developed or efficient as those in the United
States. While growing in volume, they usually have substantially less volume
than the New York Stock Exchange, and securities of some foreign issuers are
less liquid and more volatile than securities of comparable United States
issuers. Fixed commissions on foreign exchanges are generally higher than
negotiated commissions on United States exchanges. There is generally less
government supervision and regulation of securities exchanges, brokers and
listed issuers than in the United States.
FOREIGN CURRENCIES. The EAFEStrategic 20 Trust also involves the risk that
fluctuations in exchange rates between the U.S. dollar and foreign currencies
may negatively affect the value of the stocks. For example, if a foreign stock
rose 10% in price but the U.S. dollar gained 5% against the related foreign
currency, a U.S. investor's return would be reduced to about 5%. This is because
the foreign currency would "buy" fewer dollars or, conversely, a dollar would
buy more of the foreign currency. Many foreign currencies have fluctuated widely
against the U.S. dollar for a variety of reasons such as supply and demand of
the currency, investor perceptions of world or country economies, political
instability, currency speculation by institutional investors, changes in
government policies, buying and selling of currencies by central banks of
countries, trade balances and changes in interest rates. A Trust's foreign
currency transactions will be conducted with foreign exchange dealers acting as
principals on a spot (i.e., cash) buying basis. These dealers realize a profit
based on the difference between the price at which they buy the currency (bid
price) and the price at which they sell the currency (offer price). The
Evaluator will estimate the currency exchange rates based on current activity in
the related currency exchange markets, however, due to the volatility of the
markets and other factors, the estimated rates may not be indicative of the rate
a Trust might obtain had the Trustee sold the currency in the market at that
time.
LIQUIDITY. Whether or not the stocks in a Trust are listed on a stock
exchange, the stocks may delist from the exchange or principally trade in an
over-the-counter market. As a result, the existence of a liquid trading market
could depend on whether dealers will make a market in the stocks. We cannot
guarantee that dealers will maintain a market or that any market will be liquid.
The value of the stocks could fall if trading markets are limited or absent.
SPECIAL REDEMPTION. The Trustee will redeem your Units approximately 13
months after the Initial Date of Deposit unless you elect in writing to remain
invested in your Trust through the Mandatory Termination Date. If you do not
make an election, your investment will terminate and you will receive a cash
distribution of your portion of the Trust's assets. If you sell or redeem your
Units within 18 months of your purchase, you will not benefit from a reduced
federal long-term capital gains tax rate. For example, if you elect to
participate in a rollover into a new trust on the first Special Redemption Date,
you will not benefit from this reduced tax rate. Of course, we cannot guarantee
any capital gains on your investment. This redemption process could cause the
value of a Trust to fall below the minimum termination value and could result in
termination of the Trust before the Mandatory Termination Date. This could cause
your investment to terminate at the first Special Redemption Date even though
you elected to hold Units through Trust termination.
ADDITIONAL UNITS. The Sponsor may create additional Units of a Trust by
depositing into the Trust additional stocks or cash with instructions to
purchase additional stocks. A cash deposit could result in a dilution of your
investment and anticipated income because of fluctuations in the price of the
stocks between the time of the deposit and the purchase of the stocks and
because the Trust will pay brokerage fees.
VOTING. Only the Trustee may sell or vote the stocks in a Trust. While you
may sell or redeem your Units, you may not sell or vote the stocks in your
Trust. The Sponsor will instruct the Trustee how to vote the stocks. The Trustee
will vote the stocks in the same general proportion as shares held by other
shareholders if the Sponsor fails to provide instructions.
YEAR 2000. The Trusts could be negatively impacted if computer systems used
by the Sponsor, Evaluator, Supervisor or Trustee or other service providers to
the Trusts do not properly process date-related information after January 1,
2000. This is commonly known as the "Year 2000 Problem". The Sponsor, Evaluator,
Supervisor and Trustee are taking steps to address this problem and to obtain
reasonable assurances that other service providers to the Trusts are taking
comparable steps. We cannot guarantee that these steps will be sufficient to
avoid any adverse impact on the Trusts. This problem is expected to impact
corporations to varying degrees based on factors such as industry sector and
degree of technological sophistication. We cannot predict what impact, if any,
this problem will have on the issuers of stocks in the Trusts. THE TRUST
STRATEGIES
In seeking the Trusts' objectives, the Sponsor considered the ability of
the Securities to outpace inflation. While inflation is currently relatively
low, the United States has historically experienced periods of double-digit
inflation. While the prices of securities will fluctuate, over time securities
have outperformed the rate of inflation, and other less risky investments, such
as government bonds and U.S. Treasury bills. Past performance is, however, no
guarantee of future results.
The companies represented in the Trusts are some of the most well-known and
highly capitalized companies in the world. The Trusts seek to achieve better
performances than the related indexes through similar investment strategies.
Investment in a number of companies having high dividends relative to their
stock prices (usually because their stock prices are undervalued) is designed to
increase each Trust's potential for higher returns. There is, of course, no
assurance that a Trust (which includes expenses and sales charges) will achieve
its objective.
The EAFE Strategic 20 Trust may be suitable for investors who seek to
diversify their equity holdings with investments in foreign equity securities.
Today's international market offers many opportunities. While the U.S. stock
market has generally performed well in the past, international markets may
provide significant opportunities as well. The U.S. stock market has been one of
the top three performers in terms of total return among developed country
markets only once between 1993-1997 and was never the top performer in these
years. Global diversification may offer the potential to enhance overall
portfolio performance. In addition, investors may be able to achieve a better
risk/return potential by allocating an investment among a domestic investment
and an international investment. For example, rather than investing exclusively
in the Strategic Picks Trust strategy, the Standard & Poor's 500 Index stocks or
in the EAFE Strategic 20 Trust strategy, an investor may be able to achieve a
better combination of potential return and potential risk by investing 70% in
the Strategic Picks Trust strategy or Standard & Poor's 500 Index stocks and 30%
in the EAFE Strategic 20 Trust strategy. International markets can experience
different performances and while some markets may be experiencing rapid growth,
others may be in temporary decline. These market movements may offer attractive
growth potential and possible portfolio diversification for investors seeking to
add to their existing equity portfolio. The EAFE Strategic 20 Trust seeks to
combine the growth potential of undervalued stocks with the strength of stocks
listed on a foreign stock market index. Typically, companies listed on a major
market index are widely recognized, firmly established and financially strong.
Therefore, when undervalued, these stocks may provide investors with significant
growth opportunities.
Corporate restructuring, acquisitions and the use of technology may enhance
the ability of foreign companies to increase their potential profitability.
Progress of the European Monetary Union efforts to create a unified currency
could potentially add to European growth rates. In addition, if the U.S. dollar
does not remain as strong as in the recent past, foreign stocks may benefit and
foreign stocks may be relatively attractive from a valuation standpoint compared
to U.S. stock prices. Of course, an investment in foreign securities involves
risks, certain of which differ from an investment in U.S. stocks. See "Risk
Factors".
In particular, the Sponsor believes that the EAFE Strategic 20 Trust may
offer investors an attractive opportunity to diversify their portfolio with an
international component. First, markets have tended to be cyclical in
performance and at certain times U.S. stocks have outperformed foreign stocks
while foreign stocks have outperformed U.S. stocks over other periods. Second,
the U.S. stock market has been among the top five markets in terms of total
returns from 1988 through 1997 only four times and was never the top performing
market in these years (as measured by the MSCI USA Index and other MSCI country
indexes in developed market countries). Third, while diversification of
investments cannot eliminate the risk of loss, an investor may be able to reduce
overall portfolio risk by diversifying into international investments since
approximately 60% of the world's market capitalization exists outside the U.S.
Finally, over the last 10 years the stocks in Standard & Poor's 500 Index have
collectively shown a total return that is greater than the 25-year average total
return 6 times while the stocks in the MSCI EAFESM Index have collectively
outperformed the 25-year average total return only twice in the last 10 years.
Although it is impossible to predict the future of stocks markets, the MSCI
EAFESM Index stocks at some time are likely to return to the average in the
future.
It should be noted that the foregoing yield comparisons do not take into
account any expenses or sales commissions which would arise from an investment
in Units of the Trusts. The Trusts seek to achieve better performances than the
related indexes through similar investment strategies. Investment in a number of
companies having high dividends relative to their stock prices (usually because
their stock prices are undervalued) is designed to increase each Trust's
potential for higher returns. There is, of course, no assurance that a Trust
(which includes expenses and sales charges) will achieve its objective. The
investment strategies utilized by the Trusts are designed to be implemented on
an annual basis. Investors who hold Units through Trust termination may have
investment results that differ significantly from a Unit investment that is
reinvested into a new trust each year. Investors should note that a change in
the federal taxation of capital gains was recently enacted that reduces the
maximum stated marginal tax rate for certain capital gains for investments held
for more than 18 months to 20% (10% in the case of certain taxpayers in the
lowest federal tax bracket). Unitholders who elect to continue their investment
through Trust termination would qualify for such treatment. Unitholders who make
no election at the first Special Redemption Date and Unitholders who elect to
reinvest into a new series of the Trusts at the first Special Redemption Date
will not qualify for such treatment but would be subject to a maximum stated
marginal federal capital gains tax rate of 28%.
Investors should note that the above criteria were applied to the
Securities for inclusion in the Trusts as of three business days prior to the
Initial Date of Deposit. Subsequent to this date, the Securities may no longer
be included in an index, may not be providing one of the ten highest dividend
yields within these indexes or may not have one of the 2nd through 6th lowest
per share prices within the relevant index. Should a Security no longer be
included in these indexes or meet the criteria used for selection for a Trust,
such Security will not as a result thereof be removed from a Trust portfolio.
THE INDEXES
THE DOW JONES INDUSTRIAL AVERAGE. The Dow Jones Industrial Average ("DJIA")
was first published in The Wall Street Journal in 1896. Initially consisting of
just 12 stocks, the DJIA expanded to 20 stocks in 1916 and its present size of
30 stocks on October 1, 1928. The companies which make up the DJIA have remained
relatively constant over the life of the DJIA. The following is the list as it
currently appears:
Allied Signal
Aluminum Company of America
American Express Company
AT&T Corporation
Boeing Company
Caterpillar, Inc.
Chevron Corporation
Coca-Cola Company
Eastman Kodak Company
E.I. du Pont de Nemours & Company
Exxon Corporation
General Electric Company
General Motors Corporation
Goodyear Tire & Rubber Company
Hewlett-Packard Company
International Business Machines Corporation
International Paper Company
J.P. Morgan & Company, Inc.
Johnson & Johnson
McDonald's Corporation
Merck & Company, Inc.
Minnesota Mining & Manufacturing Company
Philip Morris Companies, Inc.
Procter & Gamble Company
Sears, Roebuck and Company
Travelers Group, Inc.
Union Carbide Corporation
United Technologies Corporation
Wal-Mart Stores, Inc.
Walt Disney Company
THE MSCI USA INDEX AND MSCI EAFESM INDEX. In the case of the MSCI USA Index
investment strategy, these criteria are applied within the United States market
and in the case of the MSCI EAFESM Index, these criteria are applied within the
European, Australian and Asian markets. The MSCI USA Index consists of
approximately 370 large domestic companies in the United States and has existed
since January 1, 1970. The MSCI EAFESM Index is considered to be the premier
equity benchmark for global investing and represents more than 1,000 stocks in
38 industries across 21 developed countries. These countries include Australia,
Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy,
Japan, Malaysia, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain,
Sweden, Switzerland and the United Kingdom. The MSCI Index Metholdology. While
the MSCI index methodology has evolved to capture the growth of the investment
universe, the index philosophy has never been compromised to simplify the
complicated process of investing: MSCI indices are based on detailed analysis to
make it easier for the investor to measure international performance.
Constituents are selected for a country index through the following process: (1)
Define the "Market"; (2) Capture 60% of the market capitalization of the country
across all industry groups; (3) Select the most liquid securities within each
industry; (4) Select stocks with sufficient free float; (5) Avoid
cross-ownership; and (6) Apply full market capitalization weights.
The initial research for the MSCI Indices covers the full breadth of the
global equity securities market. Country specialists track the evolution of both
listed and unlisted shares of domestically listed companies in nearly every
country in the world. Based in Geneva, these country teams collect share,
pricing, ownership, float and liquidity data for effectively all companies
worldwide. Sources for this information are local stock exchanges and brokerage
firms, newspapers, and company contacts. From this master matrix, the total
country market capitalization is adjusted for double-counting and non-domiciled
companies. All of the companies within this research coverage are eligible for
inclusion in the MSCI indices except non-domiciled companies, investment trusts
and mutual funds.
Once the total country market capitalization is analyzed, 60% of the
capitalization of each industry group and thus 60% of the entire market is
targeted for each MSCI index. This ensures that the index reflects the industry
characteristics of the overall market, and permits the construction of accurate
regional and global industry indices. Research coverage in MSCI products and
publications extends beyond the index coverage (60%) to capture 80% of the
market for each country. This coverage includes daily performance as well as
monthly valuation ratios and summarized financial statement data. When selecting
the constituents of an index, the most effective industry classification is
used--either the local convention or the MSCI schema of 38 industry groups--in
order to mirror the industry characteristics of the local market. Once the
selection process is complete, the index constituents are re-classified into the
MSCI schema of 38 industries and 8 economic sectors in order to facilitate
cross-country comparisons. The MSCI classification schema has been adopted by
Reuters for their industry classification. Securities are selected to represent
an industry based on size and the portion of earnings and revenues attributable
to that industry group. Even within an industry the goal is to represent the
full diversity of business segments. An industry representation may exceed the
60% target because one or two large companies dominate an industry. Similarly,
an industry may fall below the 80% level under conventional analysis because its
companies lack good liquidity and float, or because of extensive
cross-ownership.
A goal of the MSCI index construction process is to select the most liquid
stocks within each industry group, all other things being equal, since liquidity
is necessary but not the sole determinant for inclusion in the index. Liquidity
is monitored by monthly average trading value over time in order to determine
normal levels of volume, excluding temporary peaks and troughs. A stock's
liquidity is significant not only in absolute terms, but also relative to its
market capitalization and to average liquidity for the country as a whole.
Float is monitored for every security in the market, and low float (a small
percentage of shares freely tradable) may exclude a stock from consideration in
the index. But float can be difficult to determine: in some markets good sources
are generally not available; in other markets, information on smaller and less
prominent issues can be subject to error and time lags. Government ownership and
cross-ownership positions can change over time and are not always made public.
Float also tends to be defined differently depending on the source. Thus,
evaluations of float run the risk of penalizing those markets that have good
disclosure, regardless of the actual degree of availability of shares. As with
liquidity, sufficient float is an important consideration, not an inflexible
rule.
Cross-ownership occurs when one company has a significant ownership in
another company in the same country. In situations where cross-ownership is
substantial, including both companies in an index can skew industry weights,
distort country-level valuations (such as country price-earnings and price-book
value ratios) and overstate a country's true market size. An integral part of
the country research function is identifying cross ownerships in order to avoid
or minimize them. Country specialists in Geneva do much of the cross-ownership
identification through researching company reports, local newspapers and stock
exchange data.
All standard MSCI indices are weighted by each company's full market
capitalization (both listed and unlisted shares). This approach has the
significant advantage of objectivity--the number of shares outstanding for a
company is a constituent figure for companies around the world and is easily
agreed upon and obtainable. Full market capitalization weighting is favored to
other weighting schemes for both theoretical and practical reasons: (a) it is
impossible to judge whether a position which is currently in firm hands might be
available in the future; (b) the quality and timeliness of information on float
varies from market to market and adjustments penalize those markets with the
highest standards of disclosure; (c) the most serious consequence of float
limitations is limited liquidity which can be monitored objectively; much effort
is spent in researching and monitoring these factors when selecting constituents
for each country index but once a security is selected, it is included in the
index at its full market value. A growing number of very sizable companies have
been brought or are expected to be brought to the market with modest initial
tranches being publicly available. At the same time, the obvious relevance of
these companies instantly positions them among the core investment opportunities
in their market. In order to allow the MSCI indices to capture this new market
trend, in very exceptional cases, a company may be included at a portion of its
total market capitalization.
Morgan Stanley Capital International. Recognized as a world leader in global
financial research, Morgan Stanley monitors more than 4,500 companies in 51
countries, representing 80% of the total market value of the world's stock
markets. The Morgan Stanley Capital International ("MSCI") databases are used as
a benchmark by more than 90% of the investment community. With hundreds of
analysts located across the globe, MSCI provides comprehensive research and
in-depth knowledge about general markets and specific companies around the
world.
Since 1968, MSCI global indices have presented an array of investment
opportunities available to the international investor, including indices such as
the MSCI USA Index and the MSCI EAFESM Index. These indices seek to represent an
accurate normal portfolio. In addition, index valuation ratios and company-level
fundamental data provide tools for the international investor. MSCI believes
that local stock exchange indices are not comparable with one another due to
differences in the representation of the local market, mathematical formulas,
methods of adjusting for capital changes, and base dates. The same criteria and
calculation methodology are applied across all MSCI indices. Further, while
accounting standards continue to differ according to local customs and
practices, fundamental data is analyzed and presented in a uniform and
meaningful manner in MSCI indices--allowing investors to compare investment
opportunities across markets. Each MSCI country index is constructed so as to
minimize double counting, assuring that all industry groups are proportionately
represented, and that each country's contribution to the global or regional
index is accurately based on its market capitalization.
In 1986, Morgan Stanley acquired the indices and data from Capital
International Perspective, S.A. ("CIPSA") based in Geneva, Switzerland. CIPSA
has been researching and publishing international indices since 1969 and
continues to be solely responsible for the decisions regarding constituent
additions and deletions as well as any other methodological modifications to the
indices. Morgan Stanley contributes its expertise in technology and the
marketing and distribution of the MSCI Indices and publications. Selection of
the constituents for MSCI Indices is conducted independent of the Sponsor which
has no input regarding the components of any index.
The MSCI USA Index and MSCI EAFESM Index are the exclusive property of Morgan
Stanley. Morgan Stanley Capital International is a service mark of Morgan
Stanley and has been licensed for use by Van Kampen American Capital
Distributors, Inc.
This fund is not sponsored, endorsed, sold or promoted by Morgan Stanley.
Morgan Stanley makes no representation or warranty, express or implied, to the
owners of this fund or any member of the public regarding the advisability of
investing in funds generally or in this fund particularly or the ability of the
MSCI USA Index or MSCI EAFESM Index to track general stock market performance.
Morgan Stanley is the licensor of certain trademarks, service marks and trade
names of Morgan Stanley and of the MSCI USA Index and MSCI EAFESM Index which
are determined, composed and calculated by Morgan Stanley without regard to the
issuer of this fund or this fund. Morgan Stanley has no obligation to take the
needs of the issuer of this fund or the owners of this fund into consideration
in determining, composing or calculating the MSCI USA Index or MSCI EAFESM
Index. Morgan Stanley is not responsible for and has not participated in the
determination of the timing of, prices at, or quantities of this fund to be
issued or in the determination or calculation of the equation by which Units of
this fund is redeemable for cash. Morgan Stanley has no obligation or liability
to owners of this fund in connection with the administration, marketing or
trading of this fund.
ALTHOUGH MORGAN STANLEY SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE
IN THE CALCULATION OF AN INDEX FROM SOURCES WHICH MORGAN STANLEY CONSIDERS
RELIABLE, NEITHER MORGAN STANLEY NOR ANY OTHER PARTY GUARANTEES THE ACCURACY
AND/OR THE COMPLETENESS OF AN INDEX OR ANY DATA INCLUDED THEREIN. NEITHER MORGAN
STANLEY NOR ANY OTHER PARTY MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY LICENSEE, LICENSEE'S CUSTOMERS AND COUNTERPARTIES,
OWNERS OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF AN INDEX OR
ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR
FOR ANY OTHER USE. NEITHER MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY EXPRESS
OR IMPLIED WARRANTIES, AND MORGAN STANLEY HEREBY EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT
TO AN INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING,
IN NO EVENT SHALL MORGAN STANLEY OR ANY OTHER PARTY HAVE ANY LIABILITY FOR ANY
DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY OTHER DAMAGES
(INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
SPONSOR INFORMATION
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 & Co. ("MSDW").
MSDW, 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.
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. As of November 30, 1997, the
total stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$132,381,000 (audited). (This paragraph relates only to the Sponsor and not to
the Trust 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 INFORMATION
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 each Trust. Such
records shall include the name and address of, and the number of Units of each
Trust held by, every Unitholder. 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. 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.
TRUST TERMINATION
An investment in Units of a Trust will terminate on the first Special
Redemption Date unless a Unitholder elects in writing to remain invested in the
Trust through the Mandatory Termination Date. On the first Rollover Notification
Date the Trustee will provide written notice and form of election to Unitholders
of each Trust giving Unitholders the option to (i) have their Units redeemed and
reinvest the proceeds into a subsequent Series of the Trust (i.e., become
Rollover participants), (ii) receive an in kind distribution of any U.S.-traded
Securities in such Trust (if the Unitholder owns at least 1,000 Units) or (iii)
continue to hold the Units through the Mandatory Termination Date. Unitholders
who do not affirmatively elect on the first Rollover Notification Date to become
Rollover participants, to receive an in kind distribution or to continue to hold
Units through the Mandatory Termination Date will have their Units redeemed on
the first Special Redemption Date and will receive a cash distribution equal to
the Redemption Price per Unit on such date. To be effective, any such election
must be received by the Trustee no later than five business days prior to the
first Special Redemption Date. Unitholders who elect to remain invested in a
Trust through the Mandatory Termination Date will not receive new Units and will
not receive an interest in a new investment. Such Unitholder will continue to
hold the same Units and remain invested in the same Trust until the Mandatory
Termination Date or until such time as the Unitholder redeems the Units.
A Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of such Trust then outstanding or by the
Trustee when the value of the Securities owned by a Trust, as shown by any
evaluation, is less than $500,000 ($3,000,000 if the value of the Trust has
exceeded $15,000,000). A Trust will be liquidated by the Trustee in the event
that a sufficient number of Units of such Trust not yet sold are tendered for
redemption by the Sponsor, so that the net worth of such Trust would be reduced
to less than 40% of the value of the Securities at the time they were deposited
in such Trust. If a Trust is liquidated because of the redemption of unsold
Units by the Sponsor, the Sponsor will refund to each purchaser of Units the
entire sales charge paid by such purchaser. The Trust Agreement will terminate
upon the sale or other disposition of the last Security held thereunder, but in
no event will it continue beyond the Mandatory Termination Date.
Commencing during the period beginning nine business days prior to, and no
later than, the Mandatory Termination Date, Securities will begin to be sold in
connection with the termination of the Trusts. The Sponsor will determine the
manner, timing and execution of the sales of the 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 of the appropriate Trust and in the case of a
Trust will include with such notice a form to enable Unitholders owning 1,000 or
more Units to request an in kind distribution of the U.S.-traded Securities. 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 the U.S.-traded Securities in a Trust to the account of the
broker-dealer or bank designated by the Unitholder at Depository Trust Company.
A Unitholder in the Strategic Thirty or Strategic Fifteen Trusts electing an in
kind distribution will not receive a distribution of shares of the foreign
exchange-traded Securities but will instead receive cash representing his pro
rata portion of such Securities. The value of the Unitholder's fractional shares
of the Securities will be paid in cash. Unitholders with less than 1,000 Units,
Unitholders in a Trust 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 appropriate Trust any
accrued costs, expenses, advances or indemnities provided by the Trust
Agreement, including estimated compensation of the Trustee, costs of liquidation
and any amounts required as a reserve to provide for payment of any applicable
taxes or other governmental charges. Any sale of Securities in a Trust upon
termination may result in a lower amount than might otherwise be realized if
such sale were not required at such time. The Trustee will then distribute to
each Unitholder of each Trust his pro rata share of the balance of the Income
and Capital Accounts of such Trust.
The Sponsor currently intends to, but is not obligated to, offer for sale
units of a subsequent series of the Trusts pursuant to the Rollover Option.
There is, however, no assurance that units of any new series of the Trusts will
be offered for sale at that time, or if offered, that there will be sufficient
units available for sale to meet the requests of any or all Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
<PAGE>
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Amendment No. 2 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.
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 securites being
registered.
4.1 Consent of Interactive Data Corporation
4.2 Consent of Independent Certified Public Acountants.
EX-27 Financial Data Schedules.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series 89 has
duly caused this Amendment No. 2 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 8th day of June, 1998.
Van Kampen American Capital Equity Opportunity Trust, Series 89 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 No. 2 to the Registration Statement has been signed below on June 8,
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 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. 33-33087) and Van Kampen American Capital Equity Opportunity
Trust, Series 87 (file No. 333-44581) and are incorporated herein by reference.
EXHIBIT 1.1
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST
SERIES 89
TRUST AGREEMENT
Dated: June 8, 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
American 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 "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 "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.
8. Section 5.02 of the Standard Terms and Conditions of Trust shall
be amended by adding the following to the end of such Section:
"Notwithstanding anything to the contrary herein, unless a
Unitholder properly makes an affirmative election to the contrary
as specified in the Prospectus, each Unitholder will be deemed to
have tendered all Units then owned for redemption to the Trustee
on the first Special Redemption Date and shall have such Units
redeemed on such date as provided herein."
9. Section 6.04(e) is hereby replaced with the following:
(e) (1) Subject to the provisions of subparagraph (2) 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 excuse the Trustee from the responsibilities specified in
subparagraph (2) 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.
(2) 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 (1) 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) any
investments (including foreign currencies) for which the primary market
is outside the United States, and such cash and cash equivalents in
amounts reasonably necessary to effect the Trust's transactions in such
investments, provided that:
(a) The Trustee shall perform all duties assigned to
the Foreign Custody Manager by Rule 17f-5 under the Investment
Company Act of 1940 (17 CFR ss. 270.17f-5) ("Rule 17f-5"), as
now in effect or as such rule may be amended in the future.
The Trustee shall not delegate such duties.
(b) The Trustee shall exercise reasonable care,
prudence and diligence such as a person having responsibility
for the safekeeping of Trust assets would exercise, and shall
be liable to the Trust for any loss occurring as a result of
its failure to do so.
(c) The Trustee shall indemnify the Trust and hold
the Trust harmless from and against any risk of loss of Trust
assets held in accordance with the foreign custody contract.
(d) 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 for a period of not less than
six years from the end of the fiscal year in which the Trust
was terminated, the first two years in an easily accessible
place. 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.
(3) "Eligible Foreign Custodian" shall have the meaning
assigned to it in Rule 17f-5.
(4) "Foreign Custody Manager" shall have the meaning assigned
to it in Rule 17f-5.
<PAGE>
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 JEFFREY BIESELIN
Vice President
Attest
By JEFFREY COHEN
Assistant Treasurer
<PAGE>
SCHEDULE A TO TRUST AGREEMENT
SECURITIES INITIALLY DEPOSITED
IN
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 89
(Note: Incorporated herein and made a part hereof are the "Portfolios" as set
forth in the Prospectus.)
EXHIBIT 3.1
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
June 8, 1998
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re: VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 89
---------------------------------------------------------------
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 89 (hereinafter referred to as the "Trust"), in connection with
the preparation, execution and delivery of a Trust Agreement dated June 8, 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 th
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.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-49361) 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
EXHIBIT 3.2
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
June 8, 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 89
---------------------------------------------------------------
Gentlemen:
We have acted as counsel for Van Kampen American Capital Distributors,
Inc., Depositor of Van Kampen American Capital Equity Opportunity Trust, Series
89 (the "Fund"), in connection with the issuance of Units of fractional
undivided interest in the Fund, under a Trust Agreement dated June 8, 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 the separate unit
investment trusts described in the prospectus for the Fund (the "Trusts").
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 each Trust will consist of a portfolio of securities (the
"Securities") as set forth in the Prospectus. For purposes of this 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) Each 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 a 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 a 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 a 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) 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 which exceeds 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 a 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 a 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 a 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 is not taxable as ordinary income.
(v) If the Trustee disposes of a Trust asset (whether by
sale, taxable 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 U.S. traded Securities upon the redemption of Units or
upon the termination of a Trust. A Unitholder will receive cash
representing his pro rata portion of the foreign Securities in such a
Trust. As previously discussed, prior to the redemption of Units or the
termination of a Trust, a Unitholder is considered as owning a pro rata
portion of each of the particular 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 a 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 of the Securities held by the
Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of a U.S. traded Security or for a foreign Security
held by a 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 U.S. traded
Security or such foreign Security held by such 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 a Trust.
A domestic corporation owning Units in a 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 a 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.
To the extent dividends received by a Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
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 a Trust as miscellaneous itemized deductions
subject to this limitation.
A Unitholder will recognize taxable gain (or loss) when all or part of
the pro rata interest in a Security is either sold by a 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.
It should be noted that payments to a Trust of dividends on Securities
that are attributable to foreign corporations may be subject to foreign
withholding taxes and Unitholders should consult their tax advisers regarding
the potential tax consequences relating to the payment of any such withholding
taxes by the Trust. Any dividends withheld as a result thereof will nevertheless
be treated as income to the Unitholders. Because under the grantor trust rules,
an investor is deemed to have paid directly his share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect to such taxes. A
required holding period is imposed for such credits.
Any gain or loss 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
EXHIBIT 3.3
WINSTON & STRAWN
200 Park Avenue
New York, NY 10166-4193
June 8, 1998
Van Kampen American Capital Equity
Opportunity Trust, Series 89
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 89 (the "Fund") consisting of Strategic Ten
Trust United States Portfolio, June 1998 Series; Strategic Ten Trust United
States Portfolio, June 1998 Traditional Series; Strategic Five Trust United
States Portfolio, June 1998 Series; Strategic Five Trust United States
Portfolio, June 1998 Traditional Series; Strategic Picks Opportunity Trust, June
1998 Series and EAFE Strategic 20 Trust, June 1998 Series (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 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 333-49361), 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 in the
country denominated in the Trust's name. 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 interest, 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 each 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 Trusts, 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 Trusts 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(1) 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 a 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
EXHIBIT 4.1
Interactive Data
14 West Street
New York, NY 10005
June 5, 1998
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital
Strategic Ten Trust United States Portfolio, June
1998 Series Strategic Ten Trust United States
Portfolio, June 1998 Traditional Series Strategic
Five Trust United States Portfolio, June 1998 Series
Strategic Five Trust United States Portfolio, June
1998 Traditional Series Strategic Picks Opportunity
Trust, June 1998 Series EAFE Strategic 20 Trust, June
1998 Series
(A Unit Investment Trust) Registered Under the Securities
Act of 1933, File No. 333-49361)
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund.
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 June 8, 1998 on the statements of
condition and related securities portfolios of Van Kampen American Capital
Equity Opportunity Trust, Series 89 as of June 8, 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
June 8, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current time period taken from 487 on June 8, 1998,
it is unaudited.
</LEGEND>
<SERIES>
<NUMBER> 001
<NAME> DTEN
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-13-1999
<PERIOD-START> JUN-08-1998
<PERIOD-END> JUN-08-1998
<INVESTMENTS-AT-COST> 150,175
<INVESTMENTS-AT-VALUE> 150,175
<RECEIVABLES> 0
<ASSETS-OTHER> 62,473
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 212,648
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 65,128
<TOTAL-LIABILITIES> 65,128
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 147,520
<SHARES-COMMON-PRIOR> 0
<SHARES-COMMON-STOCK> 15,170
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 147,520
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current time period taken from 487 on June 8, 1998,
it is unaudited.
</LEGEND>
<SERIES>
<NUMBER> 002
<NAME> DTNU
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-13-1999
<PERIOD-START> JUN-08-1998
<PERIOD-END> JUN-08-1998
<INVESTMENTS-AT-COST> 147,537
<INVESTMENTS-AT-VALUE> 147,537
<RECEIVABLES> 0
<ASSETS-OTHER> 49,213
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 196,750
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 49,213
<TOTAL-LIABILITIES> 49,213
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 147,537
<SHARES-COMMON-PRIOR> 0
<SHARES-COMMON-STOCK> 15,171
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 147,537
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current time period taken from 487 on June 8, 1998,
it is unaudited.
</LEGEND>
<SERIES>
<NUMBER> 005
<NAME> DFIV
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-13-1999
<PERIOD-START> JUN-08-1998
<PERIOD-END> JUN-08-1998
<INVESTMENTS-AT-COST> 149,458
<INVESTMENTS-AT-VALUE> 149,458
<RECEIVABLES> 0
<ASSETS-OTHER> 42,708
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 192,166
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 45,350
<TOTAL-LIABILITIES> 45,350
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 146,816
<SHARES-COMMON-PRIOR> 0
<SHARES-COMMON-STOCK> 15,097
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 146,816
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current time period taken from 487 on June 8, 1998,
it is unaudited.
</LEGEND>
<SERIES>
<NUMBER> 006
<NAME> DFVU
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-13-1999
<PERIOD-START> JUN-08-1998
<PERIOD-END> JUN-08-1998
<INVESTMENTS-AT-COST> 146,817
<INVESTMENTS-AT-VALUE> 146,817
<RECEIVABLES> 0
<ASSETS-OTHER> 27,968
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 174,758
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27,968
<TOTAL-LIABILITIES> 27,968
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 146,817
<SHARES-COMMON-PRIOR> 0
<SHARES-COMMON-STOCK> 15,097
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 146,817
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current time period taken from 487 on May 11, 1998,
it is unaudited.
</LEGEND>
<SERIES>
<NUMBER> 009
<NAME> SPOT
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-13-1999
<PERIOD-START> JUN-08-1998
<PERIOD-END> JUN-08-1998
<INVESTMENTS-AT-COST> 148,917
<INVESTMENTS-AT-VALUE> 148,917
<RECEIVABLES> 0
<ASSETS-OTHER> 34,573
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 183,490
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37,206
<TOTAL-LIABILITIES> 37,206
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 146,284
<SHARES-COMMON-PRIOR> 0
<SHARES-COMMON-STOCK> 15,043
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 146,284
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current time period taken from 487 on June 8, 1998,
it is unaudited.
</LEGEND>
<SERIES>
<NUMBER> 010
<NAME> EAFE
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-13-1999
<PERIOD-START> JUN-08-1998
<PERIOD-END> JUN-08-1998
<INVESTMENTS-AT-COST> 294,760
<INVESTMENTS-AT-VALUE> 294,760
<RECEIVABLES> 0
<ASSETS-OTHER> 44,470
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 339,230
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 50,276
<TOTAL-LIABILITIES> 50,276
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 288,954
<SHARES-COMMON-PRIOR> 0
<SHARES-COMMON-STOCK> 29,774
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 288,954
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
