FILE NO: 333-48365
CIK #1025240
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
AMENDMENT NO. 3 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 94
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 fractional
beneficial interests
F. Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT
____________________________________________ __________________________
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The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
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VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST
SERIES 94
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
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I. ORGANIZATION AND GENERAL INFORMATION
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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 ) Fund Administration
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 ) *
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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
) Risk Factors
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Fund
) Trust Portfolios
) Risk Factors
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 ) Trust Portfolios
underwriter, trustee or any )
affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of Trust's securities ) Rights of Unitholders
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The 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 )
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III. ORGANIZATION, PERSONNEL AND AFFILIATED
PERSONS OF DEPOSITOR
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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 ) *
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IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
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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
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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
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VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
<S> <C>
51. Insurance of holders of trust's )
securities ) *
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
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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
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* Inapplicable, omitted, answer negative or not required
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers be accepted prior to the time the registration statement becomes
effective. The prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PRELIMINARY PROSPECTUS DATED APRIL 30, 1998
SUBJECT TO COMPLETION
May 11, 1998
VAN KAMPEN AMERICAN CAPITAL
STRATEGIC TEN TRUST
United States Portfolio, May 1998 Series
United States Portfolio, May 1998
Traditional Series
United Kingdom Portfolio, May 1998 Series
Hong Kong Portfolio, May 1998 Series
STRATEGIC FIVE TRUST
United States Portfolio, May 1998 Series
United States Portfolio, May 1998 Traditional Series
STRATEGIC FIFTEEN TRUST
Global Portfolio, May 1998 Series
STRATEGIC PICKS OPPORTUNITY TRUST
May 1998 Series
STRATEGIC THIRTY TRUST
Global Portfolio, May 1998 Series
EAFE STRATEGIC 20 TRUST
May 1998 Series
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THE FUND. Van Kampen American Capital Equity Opportunity Trust, Series 94
(the "Fund") is comprised of the underlying separate unit investment trusts set
forth above (the "Trusts"). The Trusts offer investors the opportunity to
purchase Units representing proportionate interests in a fixed, diversified
portfolio of actively traded equity securities, including common stocks of
foreign issuers. The Strategic Ten Trusts consist of common stocks of the ten
companies in the Dow Jones Industrial Average (the "DJIA"), the Financial Times
Industrial Ordinary Share Index (the "FT Index") or the Hang Seng Index having
the highest dividend yield as of the close of business three business days prior
to the Initial Date of Deposit. The Strategic Five Trusts consist of common
stocks of the five companies with the 2nd through 6th lowest per share stock
prices of the ten companies in the DJIA having the highest dividend yield as of
the close of business three business days prior to the Initial Date of Deposit.
The Strategic Thirty Global Trust consists of thirty stocks which include the
common stocks of the ten companies having the highest dividend yield as of the
close of business three business days prior to the Initial Date of Deposit in
each of the DJIA, FT Index and the Hang Seng Index. The Strategic Fifteen Global
Trust consists of fifteen common stocks which include the five stocks in each of
the DJIA, FT Index and Hang Seng Index with the 2nd through 6th lowest per share
stock prices of the ten companies in each index having the highest dividend
yield as of the close of business three business days prior to the Initial Date
of Deposit. The Strategic Picks Trust consists of ten common stocks selected
from a pre-screened subset (the "Strategic Picks Subset") of the Morgan Stanley
Capital International USA Index (the "MSCI USA Index") with the highest dividend
yields as of the close of business three business days prior to the Initial Date
of Deposit. The EAFE Strategic 20 Trust consists of twenty common stocks
selected from a pre-screened subset (the "EAFE Subset") of the Morgan Stanley
Capital International Europe, Australasia and Far East Index (the "MSCI EAFESM
Index") with the highest dividend yields as of the close of business three
business days prior to the Initial Date of Deposit. The MSCI USA Index and MSCI
EAFESM Index are the property of Morgan Stanley & Co. Morgan Stanley has granted
a license for use by the Trusts of the MSCI USA Index and the MSCI EAFESM Index
and related trademarks and tradenames. The publishers of these 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 the MSCI
EAFESMIndex, the publishers of these indexes have not granted to the Fund or the
Sponsor a license to use these indexes and are not affiliated with the Sponsor.
AN INVESTMENT IN UNITS WILL BE AUTOMATICALLY REDEEMED ON THE FIRST SPECIAL
REDEMPTION DATE UNLESS THE UNITHOLDER ELECTS IN WRITING TO HOLD UNITS THROUGH
TRUST TERMINATION.
Units of the Trusts are not insured by the FDIC, are not deposits or other
obligations of, or guaranteed by, any depository institution or any government
agency and are subject to investment risk, including possible loss of the
principal amount invested.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
ATTENTION FOREIGN INVESTORS. If you are not a United States citizen or
resident, that portion of distributions treated as United States source income
will generally be subject to U.S. federal withholding taxes; however, under
certain circumstances treaties between the United States and other countries may
reduce or eliminate such withholding tax. However, that portion of distributions
not treated as United States source income will generally not be subject to U.S.
federal withholding tax. See "Taxation." Such investors should consult their tax
advisers regarding the imposition of U.S. withholding on distributions.
OBJECTIVE OF THE FUND. 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 a
refined indexing strategy. See "Objectives and Securities Selection." Each Trust
seeks to achieve better performance than the related index for such Trust.
There is, of course, no guarantee that the objectives of the Trusts will be
achieved.
PUBLIC OFFERING PRICE.The Public Offering Price of the Units of a Trust
during the initial offering period and for secondary market transactions after
the initial offering period includes the aggregate underlying value of the
Securities in such Trust's portfolio, an initial sales charge, and cash, if any,
in the Income and Capital Accounts held or owned by such Trust. The initial
sales charge is computed as described under "Public Offering--General".
Unitholders will also be subject to deferred sales charges as described under
Offering--General". In the case of the Global Trusts, the Public Offering Price
per Unit is based on the aggregate value of the foreign Securities computed on
the basis of the offering side value of the relevant currency exchange rate
expressed in U.S. dollars during the initial offering period and on the bid side
value for secondary market transactions. During the initial offering period, the
sales charge is reduced on a graduated scale for sales involving at least 5,000
Units of a Trust. If Units were available for purchase at the time stated in the
"Summary of Essential Financial Information", the Public Offering Price per Unit
for each Trust would have been that amount set forth under "Summary of Essential
Financial Information". Except as provided in "Public Offering--Unit
Distribution", the minimum purchase is 100 Units (25 Units for qualified
retirement plans) but may vary by selling firm. See "Public Offering".
ADDITIONAL DEPOSITS. The Sponsor may, from time to time after the Initial
Date of Deposit, deposit additional Securities in the Trusts as provided under
"The Fund".
DIVIDEND AND CAPITAL DISTRIBUTIONS. Distributions of dividends and capital,
if any, received by a Trust will be reinvested into additional Units, if then
available, on the applicable Distribution Date to Unitholders of record of such
Trust on the record date as set forth in the "Summary of Essential Financial
Information". Unitholders may also elect to receive cash distributions as
provided under "Rights of Unitholders--Reinvestment Option." The estimated
initial distribution for each Trust will be that amount set forth under "Summary
of Essential Financial Information--Estimated Initial Distribution" and will be
made on November 25, 1998 to Unitholders of record on November 10, 1998. Gross
dividends received by a Trust will be distributed to Unitholders. Expenses of a
Trust will be paid with proceeds from the sale of Securities. For the
consequences of such sales, see "Taxation" and "Risk Factors." Additionally,
upon surrender of Units for redemption or termination of a Trust, the Trustee
will distribute to each Unitholder his pro rata share of such Trust's assets,
less expenses, in the manner set forth under "Rights of
Unitholders--Distributions of Income and Capital".
SECONDARY MARKET FOR UNITS. Although not obligated to do so, the Sponsor
currently intends to maintain a market for Units of the Trusts and offer to
repurchase such Units at prices which are based on the aggregate underlying
value of Equity Securities in the applicable Trust (generally determined by the
closing sale prices of the Securities) plus or minus cash, if any, in the
Capital and Income Accounts of such Trust. If a secondary market is not
maintained, a Unitholder may redeem Units at prices based upon the aggregate
underlying value of the Equity Securities in the applicable Trust plus or minus
a pro rata share of cash, if any, in the Capital and Income Accounts of such
Trust. See "Rights of Unitholders--Redemption of Units". Units sold or tendered
for redemption prior to such time as the entire deferred sales charge on such
Units has been collected will be assessed the amount of the remaining deferred
sales charge at the time of sale or redemption.
A Unitholder tendering 1,000 or more Units of a Trust for redemption may
request a distribution of shares of U.S.-traded Securities (reduced by customary
transfer and registration charges) plus cash representing any foreign
Securities. See "Rights of Unitholders--Redemption of Units".
TERMINATION. An investment in Units of a Trust will terminate approximately
thirteen months (fourteen months for Global Trusts) from the Initial Date of
Deposit unless a Unitholder elects in writing to remain invested in the Trust
through the Mandatory Termination Date. At this time, Unitholders will be given
the option to (i) have their Units redeemed and reinvest the proceeds into a
subsequent Series of the Trust, (ii) receive an in-kind distribution of any
U.S.-traded Securities in such Trust (if applicable) or (iii) continue to hold
the Units through the termination of the Trust approximately two years following
the Initial Date of Deposit. If a Unitholder makes no election at the first
Special Redemption Date, the Unitholder's Units will be redeemed on such date
and the Unitholder will receive cash representing their pro rata portion of the
Trust's assets. At least 30 days prior to the Mandatory Termination Date the
Trustee will provide written notice thereof to all Unitholders and will include
with such notice a form to enable Unitholders to elect a distribution of shares
of any U.S.-traded Securities in a Trust (if applicable), rather than to receive
payment in cash for such Unitholder's pro rata share of the amounts realized
upon the disposition of such U.S.-traded Securities. Unitholders will receive
cash representing any foreign Securities and fractional shares. Unitholders of
each of the Trusts may elect to become Rollover Unitholders as described in
"Special Redemption and Rollover in New Fund" below. Rollover Unitholders will
not receive the final liquidation distribution but will receive units of a new
Series of the Fund, if one is being offered. Unitholders not electing the
Rollover Option or a distribution of shares of Securities will receive a cash
distribution from the sale of the remaining Securities within a reasonable time
after the Trusts are terminated. See "Fund Administration--Amendment or
Termination".
REINVESTMENT OPTION. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilize their redemption or termination proceeds to
purchase units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales charge
to the extent stated in the related prospectus (which may be deferred in certain
cases).
Unitholders will initially have their distributions reinvested into
additional Units of the applicable Trust subject only to the remaining deferred
sales charge payments, if Units are available at the time of reinvestment, or,
upon request, either reinvested into an open-end management investment company
as described herein or distributed in cash. See "Rights of
Unitholders--Reinvestment Option".
SPECIAL REDEMPTION AND ROLLOVER IN NEW FUND. The Sponsor currently
anticipates that a new series of the Fund will be created each month.
Unitholders will have the option of specifying by either Rollover Notification
Date stated in "Summary of Essential Financial Information" to have all of their
Units redeemed and the distributed Securities sold by the Trustee, in its
capacity as Distribution Agent, on the related Special Redemption Date.
(Unitholders so electing are referred to herein as "Rollover Unitholders".) The
Distribution Agent will appoint the Sponsor as its agent to determine the
manner, timing and execution of sales of underlying Securities. The proceeds of
the redemption will then be invested in Units of the current Series of the Fund
(the "New Fund"), if one is offered, at a reduced sales charge. The Sponsor may,
however, stop offering units of the New Fund at any time in its sole discretion
without regard to whether all the proceeds to be invested have been invested.
Cash which has not been invested on behalf of the Rollover Unitholders in the
New Fund will be distributed shortly after the related Special Redemption Date.
However, the Sponsor anticipates that sufficient Units will be available,
although moneys in this Fund may not be fully invested on the next business day.
The trusts included in the New Fund are expected to contain portfolios selected
in accordance with the indexing strategies of the Trusts in the current Series
of the Fund. Rollover Unitholders will receive the amount of dividends in the
applicable Income Account of each Trust which will be included in the
reinvestment in units of the New Fund.
RISK FACTORS. An investment in the Fund should be made with an understanding
of the risks associated therewith, including the possible deterioration of
either the financial condition of the issuers or the general condition of the
stock market and currency fluctuations, the lack of adequate financial
information concerning an issuer and exchange control restrictions impacting
foreign issuers. An investment in a Strategic Five Trust may subject a
Unitholder to additional risk due to the relative lack of diversity in its
portfolio because the portfolio contains only five stocks. Accordingly, Units of
a Strategic Five Trust may be subject to greater market risk than other trusts
which contain a more diversified portfolio of securities. For certain risk
considerations related to the Trusts, see "Risk Factors".
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94
SUMMARY OF ESSENTIAL
FINANCIAL INFORMATION AT THE CLOSE OF
THE RELEVANT STOCK MARKET ON MAY 10,
1998 OR MAY 11, 1998
(FOR THE UNITED KINGDOM AND HONG KONG TRUSTS)
SPONSOR: VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
SUPERVISOR: VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
(AN AFFILIATE OF THE SPONSOR)
EVALUATOR: AMERICAN PORTFOLIO EVALUATION SERVICES
(A DIVISION OF AN AFFILIATE OF THE SPONSOR)
TRUSTEE: THE BANK OF NEW YORK
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STRATEGIC STRATEGIC STRATEGIC
TEN TEN TEN
UNITED UNITED STATES UNITED
STATES TRADITIONAL KINGDOM
TRUST TRUST TRUST
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Number of Units (1).................................................
Fractional Undivided Interest in the Trust per Unit (1).............
Public Offering Price:
Aggregate Value of Securities in Portfolio (2)................. $ $ $
Aggregate Value of Securities per Unit......................... $ 9.900 $ 9.725 $
Sales Charge (3)............................................... $ .275 $ .275 $
Less Deferred Sales Charge per Unit............................ $ .175 $ -- $
Public Offering Price per Unit (3)(4).......................... $ 10.000 $ 10.000 $
Redemption Price per Unit (5)....................................... $ 9.725 $ 9.725 $
Initial Secondary Market Repurchase Price per Unit (5).............. $ 9.725 $ 9.725 $
Excess of Public Offering Price per Unit over Redemption
Price per Unit................................................. $ .275 $ .275 $
Estimated Initial Distribution per Unit............................. $ $ $
Estimated Annual Dividends per Unit (6)............................. $ $ $
Estimated Annual Organizational Expenses per Unit (7)............... $ $ $
Trustee's Annual Fee and Miscellaneous Expense per Unit (8)......... $ .00756 $ .00917 $
Supervisor's Annual Supervisory Fee ................................ Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee................................... Maximum of $.0025 per Unit
Rollover Notification Dates......................................... May 17, 1999 and April 10, 2000
Special Redemption Dates............................................ June 15, 1999 and May 9, 2000
Mandatory Termination Date ......................................... May 9, 2000
Minimum Termination Value........................................... Each Trust may be terminated if the net asset value of
such Trust is less than $500,000 unless the net asset
value of such Trust's deposits has exceeded
$15,000,000, then the Trust Agreement may be
terminated if the net asset value of the Trust is less
than $3,000,000.
Income and Capital Account Record Dates............................. November 10 and July 10
Income and Capital Account Distribution Dates....................... November 25 and July 25
Evaluation Time..................................................... Close of the New York Stock Exchange (close of the
London Stock Exchange for the United Kingdom Trust and
close of the Hong Kong Stock Exchange for the Hong Kong Trust)
</TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94
SUMMARY OF ESSENTIAL
FINANCIAL INFORMATION AT THE CLOSE OF
THE RELEVANT STOCK MARKET ON MAY 10,
1998 OR MAY 11, 1998
(FOR THE UNITED KINGDOM AND HONG KONG TRUSTS)
SPONSOR: VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
SUPERVISOR: VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
(AN AFFILIATE OF THE SPONSOR)
EVALUATOR: AMERICAN PORTFOLIO EVALUATION SERVICES
(A DIVISION OF AN AFFILIATE OF THE SPONSOR)
TRUSTEE: THE BANK OF NEW YORK
<TABLE>
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STRATEGIC STRATEGIC STRATEGIC
TEN FIVE FIVE
HONG UNITED UNITED STATES
KONG STATES TRADITIONAL
TRUST TRUST TRUST
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<S> <C> <C> <C>
Number of Units (1).................................................
Fractional Undivided Interest in the Trust per Unit (1).............
Public Offering Price:
Aggregate Value of Securities in Portfolio (2)................. $ $ $
Aggregate Value of Securities per Unit......................... $ $ 9.900 $ 9.725
Sales Charge (3)............................................... $ $ .275 $ .275
Less Deferred Sales Charge per Unit............................ $ $ .175 $ --
Public Offering Price per Unit (3)(4).......................... $ $ 10.000 $ 10.000
Redemption Price per Unit (5)....................................... $ $ 9.725 $ 9.725
Initial Secondary Market Repurchase Price per Unit (5).............. $ $ 9.725 $ 9.725
Excess of Public Offering Price per Unit over Redemption
Price per Unit................................................. $ $ .275 $ .275
Estimated Initial Distribution per Unit............................. $ $ $
Estimated Annual Dividends per Unit (6)............................. $ $ $
Estimated Annual Organizational Expenses per Unit (7)............... $ $ $
Trustee's Annual Fee and Miscellaneous Expense per Unit (8)......... $ $ .00818 $ .01410
Supervisor's Annual Supervisory Fee ................................ Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee................................... Maximum of $.0025 per Unit
Rollover Notification Dates......................................... May 17, 1999 and April 10, 2000
Special Redemption Dates............................................ June 15, 1999 and May 9, 2000
Mandatory Termination Date ......................................... May 9, 2000
Minimum Termination Value........................................... Each Trust may be terminated if the net asset value of
such Trust is less than $500,000 unless the net asset
value of such Trust's deposits has exceeded $15,000,000,
then the Trust Agreement may be terminated if the net asset
value of the Trust is less than $3,000,000.
Income and Capital Account Record Dates............................. November 10 and July 10
Income and Capital Account Distribution Dates....................... November 25 and July 25
Evaluation Time..................................................... Close of the New York Stock Exchange (close of the
London Stock Exchange for the United Kingdom Trust and
close of the Hong Kong Stock Exchange for the
Hong Kong Trust)
</TABLE>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94
SUMMARY OF ESSENTIAL
FINANCIAL INFORMATION AT THE CLOSE OF
THE RELEVANT STOCK MARKET ON MAY 10,
1998 OR MAY 11, 1998
(FOR THE UNITED KINGDOM AND HONG KONG TRUSTS)
SPONSOR: VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
SUPERVISOR: VAN KAMPEN AMERICAN CAPITAL INVESTMENT ADVISORY CORP.
(AN AFFILIATE OF THE SPONSOR)
EVALUATOR: AMERICAN PORTFOLIO EVALUATION SERVICES
(A DIVISION OF AN AFFILIATE OF THE SPONSOR)
TRUSTEE: THE BANK OF NEW YORK
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC
THIRTY FIFTEEN STRATEGIC EAFE
GLOBAL GLOBAL PICKS STRATEGIC
TRUST TRUST TRUST 20 TRUST
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<S> <C> <C> <C> <C>
Number of Units (1)
Fractional Undivided Interest in the Trust per Unit (1)
Public Offering Price:
Aggregate Value of Securities in Portfolio (2) $ $ $ $
Aggregate Value of Securities per Unit $ 9.900 $ 9.900 $ 9.900 $
Sales Charge (3) $ .275 $ .275 $ .275 $
Less Deferred Sales Charge per Unit $ .175 $ .175 $ .175 $
Public Offering Price per Unit (3)(4) $ 10.000 $ 10.000 $ 10.000 $
Redemption Price per Unit (5) $ $ $ 9.725 $
Initial Secondary Market Repurchase Price per Unit (5)$ 9.720 $ 9.720 $ 9.725 $
Excess of Public Offering Price per Unit over Redemption
Price per Unit $ $ $ .275 $
Estimated Initial Distribution per Unit $ $ $ $
Estimated Annual Dividends per Unit (6) $ $ $ $
Estimated Annual Organizational Expenses per Unit (7) $ $ $ $
Trustee's Annual Fee and Miscellaneous Expense
per Unit (8) $ .06668 $ .03475 $ .01188 $
Supervisor's Annual Supervisory Fee Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee Maximum of $.0025 per Unit
Rollover Notification Dates May 17, 1999 and April 10, 2000
Special Redemption Dates June 15, 1999 and May 9, 2000
Mandatory Termination Date May 9, 2000
Minimum Termination Value Each Trust may be terminated if the net asset value of such Trust is less than
$500,000 unless the net asset value of such Trust's deposits has exceeded
$15,000,000, then the Trust Agreement may be terminated
if the net asset value of the Trust is less than $3,000,000.
Income and Capital Account Record Dates November 10 and July 10
Income and Capital Account Distribution Dates November 25 and July 25
Evaluation Time Close of the New York Stock Exchange (close of the London Stock Exchange
for the United Kingdom Trust and close of the Hong Kong Stock Exchange
for the Hong Kong Trust)
</TABLE>
- --------------------------------------------------------------------------------
(1)As of the close of business on any day on which the Sponsor is the sole
Unitholder of a Trust, the number of Units of such Trust may be adjusted so
that the Public Offering Price per Unit will equal approximately $10.
Therefore, to the extent of any such adjustment the fractional undivided
interest per Unit will increase or decrease accordingly from the amounts
indicated above.
(2)Each Equity Security is valued at the closing sale price. The aggregate value
of Securities in each of the Global Trusts represents the U.S. dollar value
based on the offering side value of the currency exchange rates for the
related currency, at the applicable Evaluation Time on the date of this
"Summary of Essential Financial Information".
(3)For the Traditional Trusts, the Sales Charge includes an initial sales charge
of 2.75% of the Public Offering Price. For all other Trusts, the Sales Charge
consists of an initial sales charge and a deferred sales charge. This initial
sales charge represents an amount equal to the difference between the first
year sales charge for a Trust (2.75% of the Public Offering Price (2.95% for
the EAFE Strategic 20 Trust)) and the amount of the deferred sales charge
imposed prior to the first Special Redemption Date ($0.175 per Unit ($0.195
per Unit for the EAFE Strategic 20 Trust)). Unitholders of Trusts other than
Traditional Trusts will be subject to a deferred sales charge during the
first year of the Trusts equal to $0.175 per Unit ($0.195 per Unit for the
EAFE Strategic 20 Trust). Unitholders of all Trusts who elect to hold Units
after the first Special Redemption Date will be charged an additional $0.15
per Unit deferred sales charge after such date ($0.17 per Unit for the EAFE
Strategic 20 Trust). This additional deferred sales charge will not be
imposed on Unitholders who do not elect to hold Units after such date.
Subsequent to the Initial Date of Deposit, the amount of the initial sales
charge will vary with changes in the aggregate value of the Securities in the
Trust. Units purchased subsequent to the initial deferred sales charge
payment, if any, will be subject only to that portion of the deferred sales
charge payments not yet collected. All deferred sales charge payments will be
paid from funds in the Capital Account, if sufficient, or from the periodic
sale of Securities. See the "Fee Table" below and "Public Offering--General".
(4)On the Initial Date of Deposit there will be no cash in the Income or Capital
Accounts. Anyone ordering Units after such date will have included in the
Public Offering Price a pro rata share of any cash in such Accounts. In the
case of the Global Trusts, the Public Offering Price per Unit is based on the
aggregate value of the foreign Securities computed on the basis of the
offering side value of the relevant currency exchange rate expressed in U.S.
dollars.
(5)The Redemption Price per Unit and the Initial Secondary Market Repurchase
Price per Unit are reduced by the unpaid portion of any deferred sales charge
imposed prior to the first Special Redemption Date. In the case of the Global
Trusts, the Redemption Price per Unit is based on the aggregate value of the
foreign Securities computed on the basis of the bid side value of the
relevant currency exchange rate expressed in U.S. dollars.
(6)Estimated annual dividends are based on the most recently declared dividends
or, in the case of the foreign Securities in the Global Trusts, on the most
recent interim and final dividends declared taking into consideration any
foreign withholding taxes. Estimated Annual Dividends per Unit are based on
the number of Units, the fractional undivided interest in the Securities per
Unit and the aggregate value of the Securities per Unit as of the Initial
Date of Deposit. Investors should note that the actual annual dividends
received per Unit will vary from the estimated amount due to changes in the
factors described in the preceding sentence and actual dividends declared and
paid by the issuers of the Securities.
(7)Each Trust (and therefore Unitholders of the respective Trust) will bear all
or a portion of its organizational costs (including costs of preparing the
registration statement, the trust indenture and other closing documents,
registering Units with the Securities and Exchange Commission and states, the
initial audit of the Trust portfolio and the initial fees and expenses of the
Trustee but not including the expenses incurred in the preparation and
printing of brochures and other advertising materials and any other selling
expenses) as is common for mutual funds. Total organizational expenses will
be amortized over one year. See "Fund Operating Expenses" and "Statements of
Condition".
(8)The Trustee will receive additional annual compensation, payable at the end
of the initial offering and in monthly installments thereafter, of $0.30 per
$1,000 of market value of any Equity Securities in a Trust traded on the Hong
Kong Stock Exchange held in a sub-custodian account at month end.
FEE TABLE
- --------------------------------------------------------------------------------
This Fee Table is intended to assist investors in understanding the costs and
expenses that an investor in a Trust will bear directly or indirectly. See
"Public Offering--General" and "Fund Operating Expenses". Although each Trust
has a fixed term, and is a unit investment trust rather than a mutual fund, this
information is presented to permit a comparison of fees. The fee tables below
assume that the principal amount of and distributions on an investment are
redeemed at the first Special Redemption Date. The examples below assume that
the principal amount of and distributions on an investment are rolled over each
year into a new Series subject only to the anticipated reduced sales charge
applicable to Rollover Unitholders. See "Right of Unitholders--Special
Redemption and Rollover in New Fund." Investors should note that while these
examples are based on the public offering price and the estimated fees for the
current Trust series, the actual public offering price and fees for any new
Series created in the future periods indicated could vary from those of the
current Trust series.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC STRATEGIC STRATEGIC
TEN TEN TEN
UNITED UNITED STATES UNITED
STATES TRADITIONAL KINGDOM
TRUST TRUST TRUST
--------------- --------------- ---------------
<S> <C> <C> <C>
UNITHOLDER TRANSACTION EXPENSES (AS A PERCENTAGE
OF OFFERING PRICE)
Initial Sales Charge Imposed on Purchase (1) 1.00% 2.75% 1.00%
Deferred Sales Charge (2)(3) 1.75% -- 1.75%
--------------- --------------- ---------------
Sales Charge (3) 2.75% 2.75% 2.75%
=============== =============== ===============
Maximum Sales Charge Imposed on Reinvested
Dividends (3)(4) 1.75% -- 1.75%
=============== =============== ===============
ESTIMATED ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF AGGREGATE VALUE)
Trustee's Fee and Other Operating Expenses 0.076%
Portfolio Supervision and Evaluation Fees 0.051%
Organizational Costs
--------------- --------------- ---------------
Total
=============== =============== ===============
EXAMPLE
An investor would pay the following expenses on a $1,000 investment, assuming
a 5% annual return and redemption at the end of each time period.
STRATEGIC STRATEGIC STRATEGIC
TEN TEN TEN
UNITED UNITED STATES UNITED
STATES TRADITIONAL KINGDOM
TRUST TRUST TRUST
--------------- --------------- ---------------
1 Year $ $ $
3 Years $ $ $
5 Years N/A
10 Years N/A
FEE TABLE (CONTINUED)
<CAPTION>
STRATEGIC STRATEGIC STRATEGIC
TEN FIVE FIVE
HONG UNITED UNITED STATES
KONG STATES TRADITIONAL
TRUST TRUST TRUST
--------------- --------------- ---------------
<S> <C> <C> <C>
UNITHOLDER TRANSACTION EXPENSES (AS A PERCENTAGE
OF OFFERING PRICE)
Initial Sales Charge Imposed on Purchase (1) 1.00% 1.00% 2.75%
Deferred Sales Charge (2)(3) 1.75% 1.75% --
--------------- --------------- ---------------
Sales Charge (3) 2.75% 2.75% 2.75%
=============== =============== ===============
Maximum Sales Charge Imposed on Reinvested
Dividends (3)(4) 1.75% 1.75% --
=============== =============== ===============
ESTIMATED ANNUAL FUND OPERATING EXPENSES (AS A
PERCENTAGE OF AGGREGATE VALUE)
Trustee's Fee and Other Operating Expenses 0.076%
Portfolio Supervision and Evaluation Fees 0.051%
Organizational Costs
--------------- --------------- ---------------
Total
=============== =============== ===============
EXAMPLE
An investor would pay the following expenses on a $1,000 investment, assuming
a 5% annual return and redemption at the end of each time period.
STRATEGIC STRATEGIC STRATEGIC
TEN FIVE FIVE
HONG UNITED UNITED STATES
KONG STATES TRADITIONAL
TRUST TRUST TRUST
--------------- --------------- ---------------
1 Year $ $ $
3 Years $ $ $
5 Years N/A
10 Years N/A
FEE TABLE (CONTINUED)
<CAPTION>
STRATEGIC STRATEGIC
THIRTY FIFTEEN STRATEGIC EAFE
GLOBAL GLOBAL PICKS STRATEGIC
TRUST TRUST TRUST 20 TRUST
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
UNITHOLDER TRANSACTION EXPENSES (AS A
PERCENTAGE OF OFFERING PRICE)
Initial Sales Charge Imposed on Purchase (1) 1.00% 1.00% 1.00% 1.00%
Deferred Sales Charge (2)(3) 1.75% 1.75% 1.75% 1.95%
--------------- --------------- --------------- ---------------
Sales Charge (3) 2.75% 2.75% 2.75% 2.95%
=============== =============== =============== ===============
Maximum Sales Charge Imposed on Reinvested
Dividends (3)(4) 1.75% 1.75% 1.75% 1.95%
=============== =============== =============== ===============
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AGGREGATE VALUE)
Trustee's Fee and Other Operating Expenses 0.674% 0.351% 0.120%
Portfolio Supervision and Evaluation Fees 0.051% 0.051% 0.051%
Organizational Costs
--------------- --------------- --------------- ---------------
Total
=============== =============== =============== ===============
EXAMPLE
An investor would pay the following expenses on a $1,000 investment, assuming
a 5% annual return and redemption at the end of each time period.
<CAPTION>
STRATEGIC STRATEGIC EAFE
THIRTY FIFTEEN STRATEGIC STRATEGIC
GLOBAL GLOBAL PICKS 20
CUMULATIVE EXPENSES PAID FOR PERIOD OF: TRUST TRUST TRUST TRUST
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
1 Year $ $ $ $
3 Years $ $ $ $
5 Years N/A N/A N/A
10 Years N/A N/A N/A
</TABLE>
The examples assume reinvestment of all dividends and distributions at the
end of each year and utilize a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations applicable to mutual funds. For
purposes of the examples, any deferred sales charge imposed on reinvestment of
dividends is not reflected until the year following payment of the dividend; the
cumulative expenses would be higher if sales charges on reinvested dividends
were reflected in the year of reinvestment. The examples should not be
considered representations of past or future expenses or annual rate of return;
the actual expenses and annual rate of return may be more or less than those
assumed for purposes of the examples.
- --------------------------------------------------------------------------------
(1)The Initial Sales Charge is actually the difference between the Sales Charge
(2.75% of the Public Offering Price (2.95% for the EAFE Strategic 20 Trust))
and the dollar amount of the Deferred Sales Charge, if any. For Trusts other
than Traditional Trusts, the Initial Sales Charge will exceed 1.00%, if the
Public Offering Price exceeds $10 per Unit.
(2)For Trusts other than Traditional Trusts, the deferred sales charge imposed
during the Trust's first year is $0.0175 per Unit per month ($0.0195 for the
EAFE Strategic 20 Trust), irrespective of purchase or redemption price,
deducted during the first year of the Trust. If a holder sells or redeems
Units before all of these deductions have been made, the balance of the
deferred sales charge payments remaining will be deducted from the sales or
redemption proceeds. If Unit price exceeds $10 per Unit, the deferred portion
of the sales charge will be less than the percentage above; if Unit price is
less than $10 per Unit, the deferred portion of the sales charge will exceed
the percentage above. 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. Unitholders who do not elect to hold
Units subsequent to the first Special Redemption Date will be subject only to
this deferred sales charge during the first year of the Trust. No deferred
sales charge is imposed on Units of the Traditional Trusts during the first
year.
(3)In addition to the Deferred Sales Charge set forth above, Unitholders of all
Trusts who elect to hold Units subsequent to the first Special Redemption
Date will be subject to a deferred sales charge of $0.15 per Unit ($0.17 per
Unit for the EAFE Strategic 20 Trust) which will be imposed after such date
as described under "Public Offering--General". This would increase the total
maximum sales charge for such Unitholders to 4.25% of the Public Offering
Price imposed over a two year period (4.65% for the EAFE Strategic 20 Trust).
(4)Reinvested dividends will be subject only to the deferred sales charge, if
any, remaining at the time of reinvestment. See "Rights of
Unitholders--Reinvestment Option".
THE FUND
- --------------------------------------------------------------------------------
Van Kampen American Capital Equity Opportunity Trust, Series 94 is comprised
of the following separate underlying unit investment trusts: Strategic Ten Trust
United States Portfolio, May 1998 Series (the "Strategic Ten United States
Trust"), Strategic Ten Trust United States Portfolio, May 1998 Traditional
Series (the "Strategic Ten United States Traditional Trust"), Strategic Ten
Trust United Kingdom Portfolio, May 1998 Series (the "Strategic Ten United
Kingdom Trust" or "United Kingdom Trust"), Strategic Ten Trust Hong Kong
Portfolio, May 1998 Series (the "Strategic Ten Hong Kong Trust" or "Hong Kong
Trust"), Strategic Five Trust United States Portfolio, May 1998 Series (the
"Strategic Five United States Trust"), Strategic Five Trust United States
Portfolio, May 1998 Traditional Series (the "Strategic Five United States
Traditional Trust"), Strategic Thirty Trust Global Portfolio, May 1998 Series
(the "Strategic Thirty Global Trust"), Strategic Fifteen Trust Global Portfolio,
May 1998 Series (the "Strategic Fifteen Global Trust"), Strategic Picks
Opportunity Trust, May 1998 Series (the "Strategic Picks Trust") and EAFE
Strategic 20 Trust, May 1998 Series ("EAFE Strategic 20 Trust"). The Strategic
Ten United States Trust, Strategic Ten United States Traditional Trust, United
Kingdom Trust and Hong Kong Trust are referred to herein as the "Strategic Ten
Trusts," the Strategic Five United States Trust and the Strategic Five United
States Traditional Trust are referred to herein as the "Strategic Five Trusts,"
the Strategic Thirty Global Trust is referred to herein as the "Strategic Thirty
Trust," and the Strategic Fifteen Global Trust is referred to herein as the
"Strategic Fifteen Trust." The Strategic Ten United States Trust, Strategic Ten
United States Traditional Trust, Strategic Five Trusts and Strategic Picks
Opportunity Trust are referred to herein as the "United States Trusts." The
United Kingdom Trust, Hong Kong Trust Strategic Thirty Trust, Strategic Fifteen
Trust and EAFE Strategic 20 are referred to herein as the "Global Trusts." The
Strategic Ten United States Traditional Trust and the Strategic Five United
States Traditional Trust are referred to herein as the "Traditional Trusts."
The Fund was created under the laws of the State of New York pursuant to a
Trust Indenture and Trust Agreement (the "Trust Agreement"), dated the date of
this Prospectus (the "Initial Date of Deposit"), among Van Kampen American
Capital Distributors, Inc., as Sponsor, Van Kampen American Capital Investment
Advisory Corp., as Supervisor, The Bank of New York, as Trustee, and American
Portfolio Evaluation Services, a division of Van Kampen American Capital
Investment Advisory Corp., as Evaluators.
The Fund offers investors the opportunity to purchase Units representing
proportionate interests in portfolios of actively traded equity securities which
are components of the DJIA, the FT Index, the Hang Seng Index, the MSCI USA
Index or the MSCI EAFESM Index. The Strategic Ten Trusts consist of common
stocks of the ten companies in the DJIA, FT Index or Hang Seng Index having the
highest dividend yield as of the close of business three business days prior to
the Initial Date of Deposit. The Strategic Five Trusts consist of common stocks
of the five companies having the 2nd through 6th lowest per share stock price of
the ten companies in the DJIA having the highest dividend yield as of the close
of business three business days prior to the Initial Date of Deposit. The
Strategic Thirty Trust consists of thirty stocks which include the common stocks
of the ten companies in each of the DJIA, FT Index and Hang Seng Index having
the highest dividend yield as of the close of business three business days prior
to the Initial Date of Deposit. The Strategic Fifteen Trust consists of fifteen
common stocks which include the five stocks in each of the DJIA, FT Index and
Hang Seng Index with the 2nd through 6th lowest per share stock price of the ten
companies in each index having the highest dividend yield as of the close of
business three business days prior to the Initial Date of Deposit. The Strategic
Picks Trust consists of ten common stocks selected from a pre-screened subset of
the MSCI USA Index with the highest dividend yields as of the close of business
three business days prior to the Initial Date of Deposit. The EAFE Strategic 20
Trust consists of twenty common stocks selected from a prescreened subset of the
MSCI EAFESM Index with the highest dividend yields as of the close of business
three business days prior to the Initial Date of Deposit.
These yields are historical and there is no assurance that any dividends will
be declared or paid in the future on the Securities in the Trusts. See "Risk
Factors". As used herein the terms "Equity Securities" and "Securities" mean the
securities (including contracts to purchase such securities) listed in
"Portfolio" for each Trust and any additional securities deposited into each
Trust as provided herein. The publishers of the indexes described herein have
not participated in any way in the creation of the Fund or in selection of the
stocks included in the Trusts and have not approved any information herein
relating thereto. The Fund may be an appropriate medium for investors who desire
to participate in portfolios 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. Unless terminated earlier, the
Trusts will terminate on the Mandatory Termination Date and any securities then
held will, within a reasonable time thereafter, be liquidated or distributed by
the Trustee. Any Securities liquidated at termination will be sold at the then
current market value for such Securities; therefore, the amount distributable in
cash to a Unitholder upon termination may be more or less than the amount such
Unitholder paid for his Units. Upon either Rollover Notification Date,
Unitholders may choose to reinvest their proceeds into a subsequent Series of
the Trusts, if available, at a reduced sales charge, to receive a pro rata
distribution of the U.S.-traded Securities then included in such Trust (if they
own the requisite minimum number of Units) or to receive a cash distribution. At
the first Rollover Notification Date, Unitholders may also elect to continue
their investment in Units through the Mandatory Termination Date (approximately
two years following the Initial Date of Deposit). Unitholders who make no
election at the first Rollover Notification Date will have their Units redeemed
and will receive a cash distribution of the proceeds.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Portfolios" herein, including delivery statements
relating to contracts for the purchase of certain such Securities and an
irrevocable letter of credit issued by a financial institution in the amount
required for such purchases. Thereafter, the Trustee, in exchange for such
Securities (and contracts) so deposited, delivered to the Sponsor documentation
evidencing the ownership of that number of Units of the Trusts indicated in
"Summary of Essential Financial Information". Unless otherwise terminated as
provided in the Trust Agreement, the Trusts will terminate on the Mandatory
Termination Date and any Securities then held will within a reasonable time
thereafter be liquidated or distributed by the Trustee.
Additional Units of a Trust may be issued at any time by depositing in such
Trust (i) additional Securities, (ii) contracts to purchase securities together
with cash or irrevocable letters of credit or (iii) cash (including a letter of
credit) with instructions to purchase additional Securities. As additional Units
are issued by a Trust, the aggregate value of the Securities in such Trust will
be increased and the fractional undivided interest in such Trust represented by
each Unit will be decreased. The Sponsor may continue to make additional
deposits of Securities or cash with instructions to purchase additional
Securities into a Trust following the Initial Date of Deposit, provided that
such additional deposits will be in amounts which will maintain, as nearly as
practicable, the same percentage relationship among the number of shares of each
Equity Security in such Trust's portfolio that existed immediately prior to any
such subsequent deposit. Any deposit by the Sponsor of additional Equity
Securities will duplicate, as nearly as is practicable, this actual
proportionate relationship and not the original proportionate relationship on
the Initial Date of Deposit, since the actual proportionate relationship may be
different than the original proportionate relationship. Any such difference may
be due to the sale, redemption or liquidation of any of the Equity Securities
deposited in a Trust on the Initial, or any subsequent, Date of Deposit. If the
Sponsor deposits cash, however, existing and new investors may experience a
dilution of their investments and a reduction in their anticipated income
because of fluctuations in the prices of the Securities between the time of the
cash deposit and the purchase of the Securities and because the Trust will pay
the associated brokerage or acquisition fees.
Each Unit of a Trust initially offered represents an undivided interest in
such Trust. To the extent that any Units are redeemed by the Trustee or
additional Units are issued as a result of additional Securities being deposited
by the Sponsor, the fractional undivided interest in a Trust represented by each
unredeemed Unit will increase or decrease accordingly, although the actual
interest in such Trust represented by such fraction will remain unchanged. Units
will remain outstanding until redeemed upon tender to the Trustee by
Unitholders, which may include the Sponsor, or until the termination of the
Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
- --------------------------------------------------------------------------------
The objective of the Strategic Ten Trusts is to provide an above average
total return through a combination of potential capital appreciation and
dividend income, consistent with the preservation of invested capital, by
investing in a portfolio of ten actively traded equity securities having the
highest dividend yield in the DJIA, FT Index or Hang Seng Index as of the close
of business three business days prior to the Initial Date of Deposit. The
objective of the Strategic Five Trusts 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 five actively traded equity securities having the 2nd through 6th
lowest per share price of the ten companies in the DJIA having the highest
dividend yield as of the close of business three business days prior to the
Initial Date of Deposit. The objective of the Strategic Thirty 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 the thirty actively traded equity
securities comprised of the ten stocks in each of the DJIA, FT Index and Hang
Seng Index having the highest dividend yield as of the close of business three
business days prior to the Initial Date of Deposit. The objective of the
Strategic Fifteen 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
fifteen common stocks comprised of the five stocks in each of the DJIA, FT Index
and Hang Seng Index with the 2nd through 6th lowest per share stock price of the
ten companies in each index having the highest dividend yield as of the close of
business three business days prior to the Initial Date of Deposit. The objective
of the Strategic Picks Trust is to provide an above average total return through
a combination of potential capital appreciation and dividend income, consistent
with the preservation of invested capital, by investing in a portfolio of ten
actively traded equity securities having the highest dividend yield in the
Strategic Picks Subset as of the close of business three business days prior to
the Initial Date of Deposit. The objective of the EAFE Strategic 20 Trust is to
provide an above average total return through a combination of potential capital
appreciation and dividend income, consistent with the preservation of invested
capital, by investing in a portfolio of twenty actively traded equity securities
having the highest dividend yield in the EAFE Subset as of the close of business
three business days prior to the Initial Date of Deposit.
In seeking the Trusts' objectives, the Sponsor also considered the ability of
the Equity 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 equity securities will fluctuate,
over time equity 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 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 Fund 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%. See
"Taxation".
The Global Trusts 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 Global Trusts seek 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
return 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.
Investors will be subject to taxation on the dividend income received by the
Trusts and on gains from the sale or liquidation of Securities. The tax
consequences affecting Unitholders will vary in each of the respective Trusts
(see "Taxation"). Investors should be aware that there is not any guarantee that
the objective of the Trusts will be achieved because it is subject to the
continuing ability of the respective issuers to declare and pay dividends and
because the market value of the Securities can be affected by a variety of
factors. Common stocks may be especially susceptible to general stock market
movements and to volatile increases and decreases of value as market confidence
in and perceptions of the issuers change. Investors should be aware that there
can be no assurance that the value of the underlying Securities will increase or
that the issuers of the Securities will pay dividends on outstanding common
shares. Any distribution of income will generally depend upon the declaration of
dividends by the issuers of the Securities and the declaration of any dividends
depends upon several factors including the financial condition of the issuers
and general economic conditions. In addition, a decrease in the value of the
foreign currencies in which the foreign Securities are denominated relative to
the U.S. dollar will adversely affect the value of the related Global Trust's
assets and income and the value of the Units of that Trust. See "Risk Factors".
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
the related index, may not be providing one of the highest dividend yields
within these indexes or may not have one of the 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.
Investors should be aware that the Fund is not a "managed" fund and as a
result the adverse financial condition of a company will not result in its
elimination from the portfolio except under extraordinary circumstances (see
"Fund Administration--Portfolio Administration"). In addition, Securities will
not be sold by a Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation. Investors should note in particular that the
Securities were selected by the Sponsor three business days prior to the date
the Securities were purchased by the Trusts. The Trusts may continue to hold
Securities originally selected through this process even though the evaluation
of the attractiveness of the Securities may have changed and, if the evaluation
were performed again at that time, the Securities would not be selected for the
Trusts.
TRUST PORTFOLIOS
- --------------------------------------------------------------------------------
The Strategic Ten Trusts consist of common stocks of the ten companies in the
DJIA, FT Index or Hang Seng Index having the highest dividend yield as of the
close of business three business days prior to the Initial Date of Deposit. The
Strategic Five Trusts consist of the five common stocks with the 2nd through 6th
lowest per share stock price of the ten companies in the DJIA having the highest
dividend yield as of the close of business three business days prior to the
Initial Date of Deposit. The Strategic Thirty Trust consists of thirty stocks
which include the common stocks of the ten companies in each of the DJIA, FT
Index and Hang Seng Index having the highest dividend yield as of the close of
business three business days prior to the Initial Date of Deposit. The Strategic
Fifteen Trust consists of fifteen common stocks which include the five stocks in
each of the DJIA, FT Index and Hang Seng Index with the 2nd through 6th lowest
per share stock price of the ten companies in each index having the highest
dividend yield as of the close of business three business days prior to the
Initial Date of Deposit. The Strategic Picks Trust consists of ten common stocks
selected from a pre-screened subset of the MSCI USA Index with the highest
dividend yields as of the close of business three business days prior to the
Initial Date of Deposit. The EAFE Strategic 20 Trust consists of twenty common
stocks selected from a prescreened subset of the MSCI EAFESM Index with the
highest dividend yields as of the close of business three business days prior to
the Initial Date of Deposit. Each of the related stock indexes is described
below.
In the case of the securities traded on the New York Stock Exchange, the
yield for each Equity Security was calculated by annualizing the last dividend
declared and dividing the result by the market value of the Equity Security as
of the close of business three business days prior to the Initial Date of
Deposit. In the case of securities traded on a foreign securities exchange, the
yield for each Equity Security was calculated by adding together the most recent
interim and final dividends declared (foreign companies generally pay one
interim and one final dividend per fiscal year) and dividing the result by the
market value of the Equity Security as of the close of business three business
days prior to the Initial Date of Deposit. An investment in each Trust involves
the purchase of a quality portfolio of attractive equities with high dividend
yields in one convenient purchase.
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. However, on March 17, 1997, four
companies were added to the DJIA replacing Bethlehem Steel Corporation, Texaco,
Inc., Westinghouse Electric Corporation and Woolworth Corporation. The companies
added to the DJIA were Hewlett-Packard Co., Johnson & Johnson, Travelers Group,
Inc. and Wal-Mart Stores, Inc. The following is the list as it currently
appears:
Allied Signal Hewlett-Packard Company
Aluminum Company of America International Business Machines Corporation
American Express Company International Paper Company
AT&T Corporation Johnson & Johnson
Boeing Company J.P. Morgan & Company, Inc.
Caterpillar, Inc. McDonald's Corporation
Chevron Corporation Merck & Company, Inc.
Coca-Cola Company Minnesota Mining & Manufacturing Company
Walt Disney Company Philip Morris Companies, Inc.
E.I. du Pont de Nemours & Company Procter & Gamble Company
Eastman Kodak Company Sears, Roebuck and Company
Exxon Corporation Travelers Group, Inc.
General Electric Company Union Carbide Corporation
General Motors Corporation United Technologies Corporation
Goodyear Tire & Rubber Company Wal-Mart Stores, Inc.
THE FINANCIAL TIMES INDUSTRIAL ORDINARY SHARE INDEX. The Financial Times
Industrial Ordinary Share Index (the "FT Index") is comprised of 30 common
stocks chosen by the editors of The Financial Times as representative of British
industry and commerce. The FT Index began as the Financial News Industrial
Ordinary Share Index in London in 1935 and became the Financial Times Industrial
Ordinary Share Index in 1947. The FT Index is calculated by FTSE International
Ltd ("FTSE"). All copy right in the FT Index Constituent list vests in FTSE.
FTSE does not sponsor, promote or endorse this product. Due to a merger between
Guinness Plc and Grand Metropolitan Plc creating Diageo Plc, Diageo Plc and
Scottish Power Plc replaced Guinness and Grand Metropolitan in the FT Index on
December 16, 1997. The following stocks are currently represented in the FT
Index:
ASDA Group Glaxo Wellcome Plc
Allied Domecq Plc Granada Group
BG Plc Guest Keen & Nettlefolds (GKN) Plc
BOC Group Imperial Chemical Industries Plc
BTR Plc Lloyds TSB Group Plc
Blue Circle Industries Plc Lucas Varity Plc
Boots Co Marks & Spencer
British Airways National Westminster Bank Plc
British Petroleum Peninsular & Oriental Steam Navigation Company
British Telecom Plc Reuters Holdings
Cadbury Schweppes Royal & Sun Alliance Insurance Group Plc
Courtaulds Plc ScottishPower Plc
Diageo Plc SmithKline Beecham
EMI Group Plc Tate & Lyle Plc
General Electric Company Plc Vodaphone Group Plc
THE HANG SENG INDEX. The Hang Seng Index, first published in 1969, consists
of 33 of the stocks currently listed on the Stock Exchange of Hong Kong Ltd.
(the "Hong Kong Stock Exchange"). On January 27, 1998, Shanghai Industrial
Holdings Ltd. and China Telecom (Hong Kong) Ltd. replaced Shun-Tak Holdings Ltd.
and South China Morning Post (Holdings) Ltd. The Hang Seng Index, which is
representative of commerce and industry, finance, properties and utilities, is
comprised of the following companies:
Amoy Properties Ltd. Hong Kong Electric Holdings Ltd.
Bank of East Asia Hong Kong and Shanghai Hotels
Cathay Pacific Airways Hong Kong Telecommunications Ltd.
Cheung Kong (Holdings) Ltd. Hopewell Holdings
Cheung Kong Infrastructure Holdings HSBC Holdings Plc
China Light & Power Company Ltd. Hutchison Whampoa
China Resources Enterprise Ltd. Hysan Development Company Ltd.
China Telecom (Hong Kong) Ltd. New World Development Co. Ltd.
Citic Pacific Shanghai Industrial Holdings Ltd.
First Pacific Company Ltd. Shangri-La Asia Ltd.
Great Eagle Holdings Sino Land Co. Ltd.
Guangdong Investment Sun Hung Kai Properties Ltd.
Hang Lung Development Company Swire Pacific (A)
Hang Seng Bank Ltd. Television Broadcasts
Henderson Investment Ltd. Wharf Holdings
Henderson Land Development Company Ltd. Wheelock & Co.
Hong Kong and China Gas
THE MSCI USA INDEX AND MSCI EAFESM INDEX. While the MSCI index methodology
has evolved to capture the growth of the investment universe, the index
philosophy has never been compromised to simplify the complicated process of
investing: MSCI indices are based on detailed analysis to make it easier for the
investor to measure international performance. Constituents are selected for a
country index through the following process: (1) Define the "Market"; (2)
Capture 60% of the market capitalization of the country across all industry
groups; (3) Select the most liquid securities within each industry; (4) Select
stocks with sufficient free float; (5) Avoid cross-ownership; and (6) Apply full
market capitalization weights.
In the case of the MSCI USA Index 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 20
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 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.
GENERAL. Each Trust consists of (a) the Equity Securities (including
contracts for the purchase thereof) listed under the applicable "Portfolio" as
may continue to be held from time to time in such Trust, (b) any additional
Equity Securities acquired and held by such Trust pursuant to the provisions of
the Trust Agreement and (c) any cash held in the related Income and Capital
Accounts. Neither the Sponsor nor the Trustee shall be liable in any way for any
failure in any of the Equity Securities. However, should any contract for the
purchase of any of the Equity Securities initially deposited hereunder fail, the
Sponsor will, unless substantially all of the moneys held in such Trust to cover
such purchase are reinvested in substitute Equity Securities in accordance with
the Trust Agreement, refund the cash and sales charge attributable to such
failed contract to all Unitholders on or before the next scheduled distribution
date.
STRATEGIC TEN TRUST UNITED STATES PORTFOLIOS
- --------------------------------------------------------------------------------
The Strategic Ten United States Trusts consist of common stocks of those ten
companies in the DJIA which had the highest dividend yield as of the close of
business three business days prior to the Initial Date of Deposit. Each
Strategic Ten United States Trust holds a separate portfolio and has a different
sales charge structure. While each Trust invests in the same stocks, the actual
amounts and weightings of the stocks could differ and the performance of the
Trusts may differ. Each Strategic Ten United States Trust consists of common
stocks of the following ten companies:
The following table sets forth a comparison of the hypothetical total return
of the ten highest yielding DJIA common stocks (the "DJIA Ten") on an annual
basis with the one-year total returns of all common stocks comprising the DJIA
in each of the last 25 years, as of December 31 in each of those years (and as
of the end of the most recent quarter). It should be noted that the common
stocks comprising the DJIA Ten may not be the same stocks from year to year and
may not be the same common stocks as those included in the Strategic Ten United
States Trusts.
COMPARISON OF TOTAL RETURNS(1)*
DOW JONES INDUSTRIAL
YEAR DJIA TEN AVERAGE
-------------------- ---------------------- ----------------------
1973 3.96% (13.16)%
1974 (0.72) (23.21)
1975 56.52 44.48
1976 34.93 22.75
1977 (1.75) (12.70)
1978 0.12 2.69
1979 12.37 10.52
1980 27.23 21.41
1981 7.52 (3.40)
1982 26.03 25.79
1983 38.75 25.65
1984 11.82 1.08
1985 29.45 32.78
1986 35.77 26.92
1987 5.93 6.02
1988 24.75 15.95
1989 25.08 31.71
1990 (7.57) (0.58)
1991 34.86 23.93
1992 7.85 7.35
1993 26.93 16.74
1994 4.12 4.95
1995 36.58 36.49
1996 28.05 28.58
1997 21.98 24.78
1998 thru 3/31
* Source: Barron's, Bloomberg L.P., Dow Jones Corporation and Ibotson
Associates. The Sponsor has not independently verified this data but has no
reason to believe that this data is incorrect in any material respect.
Reasonable assumptions were relied on where data was either unavailable or only
partially available and these assumptions could have a material impact on the
historical performance calculations.
- --------------------------------------------------------------------------------
(1)The DJIA Ten for each period were identified by ranking the dividend yield
for each of the stocks in the DJIA by annualizing the last dividend paid (the
last dividend declared was used in cases when the stock was trading
ex-dividend as of the last day of the period) and dividing the result by the
stock's market value on the first day of trading on the New York Stock
Exchange in the period. Total Return for each period was calculated by taking
the difference between period-end prices and prices at the end of the
following period (adjusted for any stock splits and corporate spinoffs) and
adding dividends for the period. Historical total returns thus represent
actual stocks and real time; the results illustrate what an investor would
have obtained had the investor been invested in the related stocks in the
periods indicated. Total Return does not take into consideration any sales
charges, commissions, expenses or taxes that will be incurred by a Trust.
Based on the total returns set forth in the table above, the average annual
total returns for the DJIA Ten for the most recent complete three, five, ten,
twenty and twenty-five year periods were 28.73%, 23.04%, 19.45%, 19.13% and
18.59%, respectively. On the other hand, based on the total returns set forth in
the table above, the average annual total returns for the DJIA for the most
recent complete three, five, ten, twenty and twenty-five year periods were
29.86%, 21.82%, 18.41%, 16.33% and 13.01%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Strategic Ten United States Trusts. Among other
factors, both stock prices (which may appreciate or depreciate) and dividends
(which may be increased, reduced or eliminated) will affect the returns. Had the
portfolios been available over the periods indicated in the above table, after
deductions for expenses and sales charges and not accounting for taxes, they
would have underperformed the DJIA in 8 of the last 25 calendar years and there
can be no assurance that the Strategic Ten United States Trusts will outperform
the DJIA over the life of such Trusts or over consecutive rollover periods, if
available. A Unitholder in a Strategic Ten United States Trust would not
necessarily realize as high a total return on an investment in the stocks upon
which the hypothetical returns shown above are based for the following reasons:
the total return figures shown above do not reflect sales charges, commissions,
Trust expenses or taxes; the Trusts are established at different times of the
year; the Trust may not be able to invest equally in the DJIA Ten and may not be
fully invested at all times; and Equity Securities are often purchased or sold
at prices different from the closing prices used in buying and selling Units.
The chart below represents past performance of the DJIA and the DJIA Ten (but
does not represent possible performance of the Strategic Ten United States
Trusts which, as indicated above, include certain expenses and commissions not
included in the chart) and should not be considered indicative of future
results. Further, results are hypothetical. The chart assumes that all dividends
during a year (including those on stocks trading ex-dividend as of the last day
of the year) are reinvested at the end of that year and does not reflect sales
charges, commissions, expenses or income taxes. Based on the foregoing
assumptions, the average annual returns (which represent the percentage return
derived by taking the sum of the initial investment and all appreciation and
dividends for the specified investment period) during the 25 year period ended
December 31, 1997, referred to in the table were 18.59% and 13.01% for the DJIA
Ten and the DJIA, respectively. There can be no assurance that a Strategic Ten
United States Trust will outperform the DJIA over its life or over consecutive
rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1973
----------------------------------------------------------------------
PERIOD DJIA TEN DJIA
- ------------------ ---------------------- ----------------------
1973 $ 10,396 $ 8,684
1974 10,321 6,668
1975 16,155 9,635
1976 21,797 11,826
1977 21,416 10,324
1978 21,442 10,602
1979 24,094 11,718
1980 30,655 14,226
1981 32,960 13,743
1982 41,540 17,287
1983 57,636 21,721
1984 64,449 21,955
1985 83,429 29,152
1986 113,272 37,000
1987 119,989 39,228
1988 149,686 45,484
1989 187,227 59,908
1990 173,054 59,560
1991 233,381 73,813
1992 251,701 79,238
1993 319,484 92,503
1994 332,647 97,082
1995 454,329 132,507
1996 581,768 170,377
1997 709,641 212,596
1998 thru 3/31
The following table sets forth a comparison of the hypothetical average
annual total return of the ten highest yielding DJIA common stocks (the "DJIA
Ten") on a biennial basis with the two-year average annual total returns of all
common stocks comprising the DJIA in the last 25 years. It should be noted that
the common stocks comprising the DJIA Ten may not be the same stocks from year
to year and may not be the same common stocks as those included in the Strategic
Ten United States Trusts.
COMPARISON OF TOTAL RETURNS(1)*
TWO YEAR PERIOD
ENDED DOW JONES INDUSTRIAL
DECEMBER 31 DJIA TEN AVERAGE
-------------------- ---------------------- ----------------------
1974 (4.70)% (18.34)%
1976 51.22 33.17
1978 3.53 (5.32)
1980 20.25 15.84
1982 16.85 10.23
1984 23.59 12.70
1986 29.41 29.82
1988 14.63 10.87
1990 10.43 14.43
1992 26.30 15.34
1994 16.76 10.69
1996 34.30 32.48
1998 thru 3/31
* Source: Barron's, Bloomberg L.P., Dow Jones Corporation and Ibotson
Associates. The Sponsor has not independently verified this data but has no
reason to believe that this data is incorrect in any material respect.
Reasonable assumptions were relied on where data was either unavailable or only
partially available and these assumptions could have a material impact on the
historical performance calculations.
- --------------------------------------------------------------------------------
(1)The DJIA Ten for each period were identified by ranking the dividend yield
for each of the stocks in the DJIA by annualizing the last dividend paid (the
last dividend declared was used in cases when the stock was trading
ex-dividend as of the last day of the period) and dividing the result by the
stock's market value on the first day of trading on the New York Stock
Exchange in the period. Total Return for each period was calculated by taking
the difference between period-end prices and prices at the end of the
following period (adjusted for any stock splits and corporate spinoffs) and
adding dividends for the period. Historical total returns thus represent
actual stocks and real time; the results illustrate what an investor would
have obtained had the investor been invested in the related stocks in the
periods indicated. Total Return does not take into consideration any sales
charges, commissions, expenses or taxes that will be incurred by a Trust.
Based on the total returns set forth in the table above, the average annual
total returns for the DJIA Ten for the most recent complete three, five, ten,
twenty and twenty-five year periods were 30.06%, 24.57%, 21.89%, 20.58% and
19.51%, respectively. On the other hand, based on the total returns set forth in
the table above, the average annual total returns for the DJIA for the most
recent complete three, five, ten, twenty and twenty-five year periods were
29.86%, 21.82%, 18.41%, 16.33% and 13.01%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Strategic Ten United States Trusts. Among other
factors, both stock prices (which may appreciate or depreciate) and dividends
(which may be increased, reduced or eliminated) will affect the returns. A
Unitholder in a Strategic Ten United States Trust would not necessarily realize
as high a total return on an investment in the stocks upon which the
hypothetical returns shown above are based for the following reasons: the total
return figures shown above do not reflect sales charges, commissions, Trust
expenses or taxes; the Trusts are established at different times of the year;
the Trust may not be able to invest equally in the DJIA Ten and may not be fully
invested at all times; and Equity Securities are often purchased or sold at
prices different from the closing prices used in buying and selling Units.
The chart below represents past performance of the DJIA and the DJIA Ten (but
does not represent possible performance of the Strategic Ten United States
Trusts which, as indicated above, include certain expenses and commissions not
included in the chart) and should not be considered indicative of future
results. Further, results are hypothetical. The chart assumes that all dividends
during a period (including those on stocks trading ex-dividend as of the last
day of the period) are reinvested at the end of that period and does not reflect
sales charges, commissions, expenses or income taxes. Based on the foregoing
assumptions, the average annual returns (which represent the percentage return
derived by taking the sum of the initial investment and all appreciation and
dividends for the specified investment period) during the 25 year period ended
December 31, 1997 referred to in the table were 19.51% and 13.01% for the DJIA
Ten and the DJIA, respectively. There can be no assurance that a Strategic Ten
United States Trust will outperform the DJIA over its life or over consecutive
rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1973
----------------------------------------------------------------------
TWO YEAR
PERIOD ENDED
DECEMBER 31 DJIA TEN DJIA
------------------ ---------------------- ----------------------
1974 $ 9,083 $ 6,668
1976 20,769 11,826
1978 22,263 10,602
1980 32,192 14,226
1982 43,955 17,287
1984 67,143 21,955
1986 112,447 37,000
1988 147,756 45,484
1990 180,196 59,560
1992 287,429 79,238
1994 391,828 97,082
1996 706,684 170,377
1998 thru 3/31
STRATEGIC TEN TRUST UNITED KINGDOM PORTFOLIO
- --------------------------------------------------------------------------------
The United Kingdom Trust consists of common stocks of those ten companies in
the Financial Times Industrial Ordinary Share Index which had the highest
dividend yield as of the close of business three business days prior to the
Initial Date of Deposit. The United Kingdom Trust consists of common stocks of
the following ten companies:
The following table sets forth a comparison of the hypothetical total return
of the FT Index and the ten stocks in the FT Index having the highest dividend
yield in each of the past 20 years (the "FT Ten") applying the Trust strategy on
an annual basis, as of December 31 in each of those years (and as of the end of
the most recent quarter). The FT Index statistics are based on a geometric,
unweighted average of the companies included in the FT Index, while the
statistics for the FT Ten are based on an approximately equal distribution
(based on market price) of each of the ten stocks. The figures have been
adjusted to take into account the effect of currency exchange rate fluctuations
of the U.S. dollar. It should be noted that the common stocks comprising the FT
Ten may not be the same stocks from year to year and may not be the same common
stocks as those included in the United Kingdom Trust.
COMPARISON OF TOTAL RETURNS(1)*
FINANCIAL TIMES
INDUSTRIAL ORDINARY
YEAR FT TEN SHARE INDEX
-------------------- ---------------------- ----------------------
1978 9.99% 8.57%
1979 4.57 10.46
1980 28.22 33.20
1981 (5.56) (4.62)
1982 4.23 0.24
1983 44.54 22.23
1984 7.81 2.63
1985 75.73 55.28
1986 27.21 24.34
1987 46.38 38.04
1988 12.65 6.59
1989 25.66 22.61
1990 15.03 10.21
1991 8.95 15.15
1992 4.72 (2.22)
1993 36.40 19.38
1994 2.49 1.75
1995 12.03 18.03
1996 7.75 8.67
1997 10.66 12.21
1998 thru 3/31
* Source: Datastream International, Inc. and Extell Financial LTD. The
Sponsor has not independently verified this data but has no reason to believe
that this data is incorrect in any material respect. Reasonable assumptions were
relied on where data was either unavailable or only partially available and
these assumptions could have a material impact on the historical performance
calculations.
- --------------------------------------------------------------------------------
(1)The FT Ten for each period were identified by ranking the dividend yield for
each of the stocks in the FT Index by adding together the interim and final
dividends paid in the prior period and dividing the result by that stock's
market value on the first trading day on the London Stock Exchange in the
then current period. Total Return for each period was calculated by taking
the difference between the market value of such stocks as of the last trading
day on the London Stock Exchange in the period from the market value of such
stocks as of the first trading day in that period (adjusted for any stock
splits and corporate spinoffs), and adding dividends for the period.
Historical total returns thus represent actual stocks and real time; the
results illustrate what an investor would have obtained had the investor been
invested in the related stocks in the periods indicated. Total Return does
not take into consideration any sales charges, commissions, expenses or taxes
that will be incurred by the United Kingdom Trust. The annual figures in the
table have been adjusted to take into account the effect of currency exchange
rate fluctuations of the U.S. dollar. All values were converted into British
pounds sterling using the opening exchange rate at the beginning of each
period. The period-end total in British pounds sterling was converted into
U.S. dollars using the ending exchange rate. This amount was then converted
back into British pounds sterling using the opening exchange rate at the
beginning of the next period.
Based on the total returns set forth in the table above, the average annual
total returns for the FT Ten for the most recent complete three, five, ten and
twenty year periods were 10.13%, 13.30%, 13.25% and 17.62%, respectively. On the
other hand, based on the total returns set forth in the table above, the average
annual total returns for the FT Index for the most recent complete three, five,
ten and twenty year periods were 12.90%, 11.82%, 10.98% and 14.30%,
respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the United Kingdom Trust. Among other factors, both
stock prices (which may appreciate or depreciate) and dividends (which may be
increased, reduced or eliminated) will affect the returns. A Unitholder in the
United Kingdom Trust would not necessarily realize as high a total return on an
investment in the stocks upon which the hypothetical returns shown above are
based for the following reasons: the total return figures shown above do not
reflect sales charges, commissions, Trust expenses or taxes; the Trusts are
established at different times of the year; the Trust may not be able to invest
equally in the FT Ten and may not be fully invested at all times; Equity
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.
The chart below represents past performance of the FT Index and the FT Ten
(but not the United Kingdom Trust which as indicated above includes certain
expenses and commissions not included in the chart) and should not be considered
indicative of future results. Further, results are hypothetical. The chart
assumes that all dividends during a year are reinvested at the end of that year
and does not reflect commissions, custodial fees or income taxes. The annual
figures in the following table have been adjusted to take into account the
effect of currency exchange rate fluctuations of the U.S. dollar as described in
the footnotes below. Based on the foregoing assumptions, the compound annual
returns (which represent the percentage return derived by taking the sum of the
initial investment and all appreciation and dividends for the specified
investment period) during the period referred to in the table were 17.62% and
14.30% for the FT Ten and the FT Index, respectively. There can be no assurance
that the United Kingdom Trust will outperform the FT Index over its life or over
consecutive rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1978
PERIOD FT TEN FTINDEX
------------------ ---------------------- ----------------------
1978 $ 10,999 $ 10,857
1979 11,502 11,993
1980 14,747 15,974
1981 13,927 15,236
1982 14,517 15,273
1983 20,982 18,668
1984 22,621 19,159
1985 39,752 29,750
1986 50,568 36,991
1987 74,022 51,062
1988 83,386 54,427
1989 104,783 66,733
1990 120,531 73,547
1991 131,319 84,689
1992 137,517 82,809
1993 187,573 98,858
1994 192,244 100,588
1995 215,371 118,723
1996 232,062 129,017
1997 256,800 144,770
1998 thru 3/31
- --------------------------------------------------------------------------------
(1)The $10,000 initial investment was converted into British pounds sterling
using the opening exchange rate at the beginning of each period.
(2)The period-end total in British pounds sterling was converted into U.S.
dollars using the ending exchange rate. This amount was then converted back
into British pounds sterling using the opening exchange rate at the beginning
of the next period.
The following table sets forth a comparison of the hypothetical average
annual total return of the FT Index and the ten stocks in the FT Index having
the highest dividend yield in the past 20 years (the "FT Ten") applying the
Trust strategy on a biennial basis, as of December 31 in each two-year period.
The FT Index statistics are based on a geometric, unweighted average of the
companies included in the FT Index, while the statistics for the FT Ten are
based on an approximately equal distribution (based on market price) of each of
the ten stocks. The figures have been adjusted to take into account the effect
of currency exchange rate fluctuations of the U.S. dollar. It should be noted
that the common stocks comprising the FT Ten may not be the same stocks from
year to year and may not be the same common stocks as those included in the
United Kingdom Trust.
COMPARISON OF TOTAL RETURNS(1)*
TWO YEAR FINANCIAL TIMES
PERIOD ENDED INDUSTRIAL ORDINARY
DECEMBER 31 FT TEN SHARE INDEX
-------------------- ---------------------- ----------------------
1979 5.18% 9.51%
1981 5.54 12.71
1983 24.85 10.69
1985 42.77 26.24
1987 39.16 31.01
1989 15.88 14.32
1991 13.33 12.65
1993 17.81 8.04
1995 3.53 9.59
1997 7.73 10.43
1998 thru 3/31
* Source: Datastream International, Inc. and Extell Financial LTD. The
Sponsor has not independently verified this data but has no reason to believe
that this data is incorrect in any material respect. Reasonable assumptions were
relied on where data was either unavailable or only partially available and
these assumptions could have a material impact on the historical performance
calculations.
- --------------------------------------------------------------------------------
(1)The FT Ten for each period were identified by ranking the dividend yield for
each of the stocks in the FT Index by adding together the interim and final
dividends paid in the prior period and dividing the result by that stock's
market value on the first trading day on the London Stock Exchange in the
then current period. Total Return for each period was calculated by taking
the difference between the market value of such stocks as of the last trading
day on the London Stock Exchange in the period from the market value of such
stocks as of the first trading day in that period (adjusted for any stock
splits and corporate spinoffs), and adding dividends for the period.
Historical total returns thus represent actual stocks and real time; the
results illustrate what an investor would have obtained had the investor been
invested in the related stocks in the periods indicated. Total Return does
not take into consideration any sales charges, commissions, expenses or taxes
that will be incurred by the United Kingdom Trust. The annual figures in the
table have been adjusted to take into account the effect of currency exchange
rate fluctuations of the U.S. dollar. All values were converted into British
pounds sterling using the opening exchange rate at the beginning of each
period. The period-end total in British pounds sterling was converted into
U.S. dollars using the ending exchange rate. This amount was then converted
back into British pounds sterling using the opening exchange rate at the
beginning of the next period.
Based on the total returns set forth in the table above, the average annual
total returns for the FT Ten for the most recent complete three, five, ten and
twenty year periods were 4.92%, 9.90%, 15.45% and 16.43%, respectively. On the
other hand, based on the total returns set forth in the table above, the average
annual total returns for the FT Index for the most recent complete three, five,
ten and twenty year periods were 12.90%, 11.82%, 10.98% and 14.30%,
respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the United Kingdom Trust. Among other factors, both
stock prices (which may appreciate or depreciate) and dividends (which may be
increased, reduced or eliminated) will affect the returns. A Unitholder in the
United Kingdom Trust would not necessarily realize as high a total return on an
investment in the stocks upon which the hypothetical returns shown above are
based for the following reasons: the total return figures shown above do not
reflect sales charges, commissions, Trust expenses or taxes; the Trusts are
established at different times of the year; the Trust may not be able to invest
equally in the FT Ten and may not be fully invested at all times; Equity
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.
The chart below represents past performance of the FT Index and the FT Ten
(but not the United Kingdom Trust which as indicated above includes certain
expenses and commissions not included in the chart) and should not be considered
indicative of future results. Further, results are hypothetical. The chart
assumes that all dividends during a year are reinvested at the end of that year
and does not reflect commissions, custodial fees or income taxes. The annual
figures in the following table have been adjusted to take into account the
effect of currency exchange rate fluctuations of the U.S. dollar as described in
the footnotes below. Based on the foregoing assumptions, the compound annual
returns (which represent the percentage return derived by taking the sum of the
initial investment and all appreciation and dividends for the specified
investment period) during the period referred to in the table were 16.43% and
14.30% for the FT Ten and the FT Index, respectively. There can be no assurance
that the United Kingdom Trust will outperform the FT Index over its life or over
consecutive rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1978(1)(2
----------------------------------------------------------------------
TWO-YEAR
PERIOD ENDED
DECEMBER 31 FT TEN FT INDEX
- ------------------ ---------------------- ----------------------
1979 $ 11,062 $ 11,993
1981 12,322 15,236
1983 19,206 18,668
1985 39,147 29,750
1987 75,805 51,062
1989 101,784 66,733
1991 130,721 84,689
1993 181,433 98,858
1995 194,476 118,723
1997 225,725 144,770
1998 thru 3/31
- --------------------------------------------------------------------------------
1) The $10,000 initial investment was converted into British pounds sterling
using the opening exchange rate at the beginning of each period.
(2)The period-end total in British pounds sterling was converted into U.S.
dollars using the ending exchange rate. This amount was then converted back
into British pounds sterling using the opening exchange rate at the beginning
of the next period.
STRATEGIC TEN TRUST HONG KONG PORTFOLIO
- --------------------------------------------------------------------------------
The Hong Kong Trust consists of common stocks of those ten companies in the
Hang Seng Index which had the highest dividend yield as of the close of business
three business days prior to the Initial Date of Deposit. The Hong Kong Trust
consists of common stocks of the following ten companies:
The following table sets forth a comparison of the hypothetical total return
of the Hang Seng Index and the ten stocks in the Hang Seng Index having the
highest dividend yield in each of the past 20 years (the "Hang Seng Ten")
applying the Trust strategy on an annual basis, as of December 31 in each of
those years (and as of the end of the most recent quarter). The Hang Seng Index
statistics are based on a geometric, unweighted average of the companies
included in the Hang Seng Index, while the statistics for the Hang Seng Ten are
based on an approximately equal distribution (based on market price) of each of
the ten stocks. The figures have been adjusted to take into account the effect
of currency exchange rate fluctuations of the U.S. dollar. It should be noted
that the common stocks comprising the Hang Seng Ten may not be the same stocks
from year to year and may not be the same common stocks as those included in the
Hong Kong Trust.
COMPARISON OF TOTAL RETURNS(1)*
YEAR HANG SENG TEN HANG SENG INDEX
-------------------- ---------------------- ----------------------
1978 17.92% 23.27%
1979 67.81 80.78
1980 38.03 67.12
1981 (5.87) (11.61)
1982 (38.76) (48.01)
1983 (3.30) (0.28)
1984 57.36 45.12
1985 43.30 52.26
1986 62.35 52.17
1987 (1.22) (7.09)
1988 43.24 20.70
1989 7.85 10.36
1990 6.02 11.98
1991 51.11 48.59
1992 38.79 33.54
1993 109.72 123.15
1994 (35.60) (29.26)
1995 16.07 27.34
1996 33.68 37.74
1997 (17.04) (16.92)
1998 thru 3/31
* Source: Datastream International, Inc. and The Hong Kong Stock Exchange.
The Sponsor has not independently verified this data but has no reason to
believe that this data is incorrect in any material respect. Reasonable
assumptions were relied on where data was either unavailable or only partially
available and these assumptions could have a material impact on the historical
performance calculations
- --------------------------------------------------------------------------------
(1)The Hang Seng Ten for each period were identified by ranking the dividend
yield for each of the stocks in the Hang Seng Index by adding together the
interim and final dividends paid in the prior period and dividing the result
by that stock's market value on the first trading day on the Hong Kong Stock
Exchange in the then current period. Total Return for each period was
calculated by taking the difference between the market value of such stocks
as of the last trading day on the Hong Kong Stock Exchange in the period from
the market value of such stocks as of the first trading day in that period
(adjusted for any stock splits and corporate spinoffs), and adding dividends
for the period. Historical total returns thus represent actual stocks and
real time; the results illustrate what an investor would have obtained had
the investor been invested in the related stocks in the periods indicated.
Total Return does not take into consideration any sales charges, commissions,
expenses or taxes that will be incurred by the Hong Kong Trust. The annual
figures in the table have been adjusted to take into account the effect of
currency exchange rate fluctuations of the U.S. dollar. All values were
converted into Hong Kong dollars using the opening exchange rate at the
beginning of each period. The period-end total in Hong Kong dollars was
converted into U.S. dollars using the ending exchange rate. This amount was
then converted back into Hong Kong dollars using the opening exchange rate at
the beginning of the next period.
Based on the total returns set forth in the table above, the average annual
total returns for the Hang Seng Ten for the most recent complete three, five,
ten and twenty year periods were 8.78%, 11.70%, 19.57% and 19.08%, respectively.
On the other hand, based on the total returns set forth in the table above, the
average annual total returns for the Hang Seng Index for the most recent
complete three, five, ten and twenty year periods were 13.37%, 18.13%, 21.14%
and 19.69%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Hong Kong Trust. Among other factors, both stock
prices (which may appreciate or depreciate) and dividends (which may be
increased, reduced or eliminated) will affect the returns. Had the portfolio
been available over the periods indicated in the above table, after deductions
for expenses and sales charges and not accounting for taxes, it would have
underperformed the Hang Seng Index in 12 of the last 20 years and a Unitholder
in the Hong Kong Trust would not necessarily realize as high a total return on
an investment in the 10 stocks upon which the hypothetical returns shown above
are based for the following reasons: the total return figures shown above do not
reflect sales charges, commissions, Trust expenses or taxes; the Trusts are
established at different times of the year; the Trust may not be able to invest
equally in the Hang Seng Ten and may not be fully invested at all times; Equity
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.
The chart below represents past performance of the Hang Seng Index and the
Hang Seng Ten (but not the Hong Kong Trust which as indicated above includes
certain expenses and commissions not included in the chart) and should not be
considered indicative of future results. Further, results are hypothetical. The
chart assumes that all dividends during a year are reinvested at the end of that
year and does not reflect commissions, custodial fees or income taxes. The
annual figures in the following table have been adjusted to take into account
the effect of currency exchange rate fluctuations on the U.S. dollar as
described in the footnotes below. Based on the foregoing assumptions, the
compound annual returns (which represent the percentage return derived by taking
the sum of the initial investment and all appreciation and dividends for the
specified investment period) during the period referred to in the table were
19.08% and 19.69% for the Hang Seng Ten and the Hang Seng Index, respectively.
There can be no assurance that the Hong Kong Trust will outperform the Hang Seng
Index over its life or over consecutive rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1978(1)(2)
----------------------------------------------------------------------
PERIOD HANG SENG TEN HANG SENG INDEX
- ------------------ ---------------------- ----------------------
1978 $ 11,792 $ 12,327
1979 19,788 22,285
1980 27,314 37,242
1981 25,710 32,918
1982 15,745 17,114
1983 15,225 17,110
1984 23,959 24,829
1985 34,333 37,805
1986 55,739 57,528
1987 55,059 53,449
1988 78,867 64,513
1989 85,058 71,197
1990 90,178 79,726
1991 136,269 118,465
1992 189,127 158,199
1993 396,638 353,020
1994 255,435 249,726
1995 296,483 318,002
1996 396,338 438,015
1997 328,802 363,903
1998 thru 3/31
- --------------------------------------------------------------------------------
(1)The $10,000 initial investment was converted into Hong Kong dollars using the
opening exchange rate at the beginning of each period.
(2)The period-end total in Hong Kong dollars was converted into U.S. dollars
using the ending exchange rate. This amount was then converted back into Hong
Kong dollars using the opening exchange rate at the beginning of the next
period. The following table sets forth a comparison of the hypothetical
average annual total return of the Hang Seng Index and the ten stocks in the
Hang Seng
Index having the highest dividend yield in the past 20 years (the "Hang Seng
Ten") applying the Trust strategy on a biennial basis, as of December 31 in each
two-year period. The Hang Seng Index statistics are based on a geometric,
unweighted average of the companies included in the Hang Seng Index, while the
statistics for the Hang Seng Ten are based on an approximately equal
distribution (based on market price) of each of the ten stocks. The figures have
been adjusted to take into account the effect of currency exchange rate
fluctuations of the U.S. dollar. It should be noted that the common stocks
comprising the Hang Seng Ten may not be the same stocks from year to year and
may not be the same common stocks as those included in the Hong Kong Trust.
COMPARISON OF TOTAL RETURNS(1)*
TWO YEAR
PERIOD ENDED
DECEMBER 31 HANG SENG TEN HANG SENG INDEX
-------------------- ---------------------- ----------------------
1979 32.58% 49.28%
1981 12.31 21.54
1983 (19.06) (27.91)
1985 45.94 48.65
1987 27.26 18.90
1989 25.82 15.41
1991 16.60 28.99
1993 52.10 72.63
1995 (19.45) (5.09)
1997 3.03 6.97
1998 thru 3/31
* Source: Datastream International, Inc. and The Hong Kong Stock Exchange.
The Sponsor has not independently verified this data but has no reason to
believe that this data is incorrect in any material respect. Reasonable
assumptions were relied on where data was either unavailable or only partially
available and these assumptions could have a material impact on the historical
performance calculations.
- --------------------------------------------------------------------------------
(1)The Hang Seng Ten for each period were identified by ranking the dividend
yield for each of the stocks in the Hang Seng Index by adding together the
interim and final dividends paid in the prior period and dividing the result
by that stock's market value on the first trading day on the Hong Kong Stock
Exchange in the then current period. Total Return for each period was
calculated by taking the difference between the market value of such stocks
as of the last trading day on the Hong Kong Stock Exchange in the period from
the market value of such stocks as of the first trading day in that period
(adjusted for any stock splits and corporate spinoffs), and adding dividends
for the period. Historical total returns thus represent actual stocks and
real time; the results illustrate what an investor would have obtained had
the investor been invested in the related stocks in the periods indicated.
Total Return does not take into consideration any sales charges, commissions,
expenses or taxes that will be incurred by the Hong Kong Trust. The annual
figures in the table have been adjusted to take into account the effect of
currency exchange rate fluctuations of the U.S. dollar. All values were
converted into Hong Kong dollars using the opening exchange rate at the
beginning of each period. The period-end total in Hong Kong dollars was
converted into U.S. dollars using the ending exchange rate. This amount was
then converted back into Hong Kong dollars using the opening exchange rate at
the beginning of the next period.
Based on the total returns set forth in the table above, the average annual
total returns for the Hang Seng Ten for the most recent complete three, five,
ten and twenty year periods were (4.63)%, 14.95%, 15.73% and 16.62%,
respectively. On the other hand, based on the total returns set forth in the
table above, the average annual total returns for the Hang Seng Index for the
most recent complete three, five, ten and twenty year periods were 13.37%,
18.13%, 21.14% and 19.69%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Hong Kong Trust. Among other factors, both stock
prices (which may appreciate or depreciate) and dividends (which may be
increased, reduced or eliminated) will affect the returns. A Unitholder in the
Hong Kong Trust would not necessarily realize as high a total return on an
investment in the 10 stocks upon which the hypothetical returns shown above are
based for the following reasons: the total return figures shown above do not
reflect sales charges, commissions, Trust expenses or taxes; the Trusts are
established at different times of the year; the Trust may not be able to invest
equally in the Hang Seng Ten and may not be fully invested at all times; Equity
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.
The chart below represents past performance of the Hang Seng Index and the
Hang Seng Ten (but not the Hong Kong Trust which as indicated above includes
certain expenses and commissions not included in the chart) and should not be
considered indicative of future results. Further, results are hypothetical. The
chart assumes that all dividends during a year are reinvested at the end of that
year and does not reflect commissions, custodial fees or income taxes. The
annual figures in the following table have been adjusted to take into account
the effect of currency exchange rate fluctuations on the U.S. dollar as
described in the footnotes below. Based on the foregoing assumptions, the
compound annual returns (which represent the percentage return derived by taking
the sum of the initial investment and all appreciation and dividends for the
specified investment period) during the period referred to in the table were
16.62% and 19.69% for the Hang Seng Ten and the Hang Seng Index, respectively.
There can be no assurance that the Hong Kong Trust will outperform the Hang Seng
Index over its life or over consecutive rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1977(1)(2)
----------------------------------------------------------------------
TWO YEAR
PERIOD ENDED
DECEMBER 31 HANG SENG TEN HANG SENG INDEX
- ------------------ ---------------------- ----------------------
1979 $ 17,576 $ 22,285
1981 22,170 32,918
1983 14,523 17,110
1985 30,934 37,805
1987 50,095 53,449
1989 79,307 71,197
1991 107,826 118,465
1993 249,446 353,020
1995 161,861 318,002
1997 171,824 363,903
1998 thru 3/31
- --------------------------------------------------------------------------------
(1)The $10,000 initial investment was converted into Hong Kong dollars using the
opening exchange rate at the beginning of each period.
(2)The period-end total in Hong Kong dollars was converted into U.S. dollars
using the ending exchange rate. This amount was then converted back into Hong
Kong dollars using the opening exchange rate at the beginning of the next
period.
STRATEGIC FIVE TRUST UNITED STATES PORTFOLIOS
- --------------------------------------------------------------------------------
The Strategic Five United States Trusts consist of common stocks of those
five companies which had the 2nd through 6th lowest per share stock price of the
ten companies in the DJIA which had the highest dividend yield as of the close
of business three business days prior to the Initial Date of Deposit.
Historically, the lowest priced stock in the DJIA has been a company
experiencing difficulties. Each Strategic Five Trust holds a separate portfolio
and has a different sales charge structure. While each Trust invests in the same
stocks, the actual amounts and weightings of the stocks could differ and the
performance of the Trusts may differ. Each Strategic Five United States Trust
consists of common stocks of the following five companies:
The following table sets forth a comparison of the hypothetical total return
of the 2nd through 6th lowest priced stocks of the ten highest yielding DJIA
common stocks (the "DJIA Five") on an annual basis with the one-year total
returns of all common stocks comprising the DJIA in each of the last 25 years,
as of December 31 in each of those years (and as of the end of the most recent
quarter). It should be noted that the common stocks comprising the DJIA Five may
not be the same stocks from year to year and may not be the same common stocks
as those included in the Strategic Five United States Trusts.
COMPARISON OF TOTAL RETURNS(1)*
DOW JONES INDUSTRIAL
YEAR DJIA FIVE AVERAGE
- -------------------- ---------------------- ----------------------
1973 18.58% (13.16)%
1974 0.56 (23.21)
1975 64.54 44.48
1976 39.29 22.75
1977 (4.82) (12.70)
1978 0.76 2.69
1979 19.86 10.52
1980 32.33 21.41
1981 3.15 (3.40)
1982 48.11 25.79
1983 43.50 25.65
1984 11.60 1.08
1985 37.00 32.78
1986 36.10 26.92
1987 (2.75) 6.02
1988 22.65 15.95
1989 10.49 31.71
1990 (20.71) (0.58)
1991 56.02 23.93
1992 24.96 7.35
1993 38.67 16.74
1994 3.33 4.95
1995 42.57 36.49
1996 32.06 28.58
1997 27.68 24.78
1998 thru 3/31
* Source: Barron's, Bloomberg L.P., Dow Jones Corporation and Ibottson
Associates. The Sponsor has not independently verified this data but has no
reason to believe that this data is incorrect in any material respect.
Reasonable assumptions were relied on where data was either unavailable or only
partially available and these assumptions could have a material impact on the
historical performance calculations.
- --------------------------------------------------------------------------------
(1)The DJIA Five for each period were identified by ranking the dividend yield
for each of the stocks in the DJIA by annualizing the last dividend paid (the
last dividend declared was used in cases when the stock was trading
ex-dividend as of the last day of the period) and dividing the result by the
stock's market value on the first day of trading on the New York Stock
Exchange in the period. The top ten highest dividend yielding stocks were
then ranked by price from highest to lowest. The absolute lowest priced stock
was eliminated and the next five lowest priced stocks were selected for the
comparison. Total Return for each period was calculated by taking the
difference between period-end prices and prices at the end of the following
period (adjusted for any stock splits and corporate spinoffs) and adding
dividends for the period. Historical total returns thus represent actual
stocks and real time; the results illustrate what an investor would have
obtained had the investor been invested in the related stocks in the periods
indicated. Total Return does not take into consideration any sales charges,
commissions, expenses or taxes that will be incurred by a Trust.
Based on the total returns set forth in the table above, the average annual
total returns for the DJIA Five for the most recent complete three, five, ten,
twenty and twenty-five year periods were 33.96%, 28.06%, 21.85%, 21.74% and
21.61%, respectively. On the other hand, based on the total returns set forth in
the table above, the average annual total returns for the DJIA for the most
recent complete three, five, ten, twenty and twenty-five year periods were
29.86%, 21.82%, 18.41%, 16.33% and 13.01%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Strategic Five United States Trusts. Among other
factors, both stock prices (which may appreciate or depreciate) and dividends
(which may be increased, reduced or eliminated) will affect the returns. Had the
portfolios been available over the periods indicated in the above table, after
deductions for expenses and sales charges and not accounting for taxes, they
would have underperformed the DJIA in 5 of the last 25 calendar years and there
can be no assurance that the Strategic Five United States Trusts will outperform
the DJIA over the life of such Trusts or over consecutive rollover periods, if
available. A Unitholder in a Strategic Five United States Trust would not
necessarily realize as high a total return on an investment in the stocks upon
which the hypothetical returns shown above are based for the following reasons:
the total return figures shown above do not reflect sales charges, commissions,
Trust expenses or taxes; the Trusts are established at different times of the
year; the Trust may not be able to invest equally in the DJIA Five and may not
be fully invested at all times; and Equity Securities are often purchased or
sold at prices different from the closing prices used in buying and selling
Units.
The chart below represents past performance of the DJIA and the DJIA Five
(but does not represent possible performance of the Strategic Five United States
Trusts which, as indicated above, include certain expenses and commissions not
included in the chart) and should not be considered indicative of future
results. Further, results are hypothetical. The chart assumes that all dividends
during a year (including those on stocks trading ex-dividend as of the last day
of the year) are reinvested at the end of that year and does not reflect sales
charges, commissions, expenses or income taxes. Based on the foregoing
assumptions, the average annual returns (which represent the percentage return
derived by taking the sum of the initial investment and all appreciation and
dividends for the specified investment period) during the 25 year period ended
December 31, 1997 referred to in the table were 21.61% and 13.01% for the DJIA
Five and the DJIA, respectively. There can be no assurance that a Strategic Five
United States Trust will outperform the DJIA over its life or over consecutive
rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1973
----------------------------------------------------------------------
PERIOD DJIA FIVE DJIA
------------------ ---------------------- ----------------------
1973 $ 11,858 $ 8,684
1974 11,924 6,668
1975 19,620 9,635
1976 27,329 11,826
1977 26,012 10,324
1978 26,210 10,602
1979 31,415 11,718
1980 41,571 14,226
1981 42,881 13,743
1982 63,511 17,287
1983 91,138 21,721
1984 101,710 21,955
1985 139,343 29,152
1986 189,646 37,000
1987 184,430 39,228
1988 226,204 45,485
1989 249,933 59,908
1990 198,172 59,560
1991 309,187 73,813
1992 386,361 79,238
1993 535,766 92,503
1994 553,607 97,082
1995 789,278 132,507
1996 1,042,320 170,377
1997 1,330,835 212,596
1998 thru 3/31
The following table sets forth a comparison of the hypothetical average
annual total return of the 2nd through 6th lowest priced stocks of the ten
highest yielding DJIA common stocks (the "DJIA Five") on a biennial basis with
the two-year average annual total returns of all common stocks comprising the
DJIA in the last 25 years. It should be noted that the common stocks comprising
the DJIA Five may not be the same stocks from year to year and may not be the
same common stocks as those included in the Strategic Five United States Trusts.
COMPARISON OF TOTAL RETURNS(1)*
TWO YEAR
PERIOD ENDED DOW JONES INDUSTRIAL
DECEMBER 31 DJIA FIVE AVERAGE
- -------------------- ---------------------- ----------------------
1974 2.99% (18.34)%
1976 52.83 33.17
1978 (0.07) (5.32)
1980 32.71 15.84
1982 13.72 10.23
1984 24.04 12.70
1986 37.09 29.82
1988 10.41 10.87
1990 0.62 14.43
1992 41.48 15.34
1994 23.40 10.69
1996 36.16 32.48
1998 thru 3/31
* Source: Barron's, Bloomberg L.P., Dow Jones Corporation and Ibottson
Associates. The Sponsor has not independently verified this data but has no
reason to believe that this data is incorrect in any material respect.
Reasonable assumptions were relied on where data was either unavailable or only
partially available and these assumptions could have a material impact on the
historical performance calculations.
- --------------------------------------------------------------------------------
(1)The DJIA Five for each period were identified by ranking the dividend yield
for each of the stocks in the DJIA by annualizing the last dividend paid (the
last dividend declared was used in cases when the stock was trading
ex-dividend as of the last day of the period) and dividing the result by the
stock's market value on the first day of trading on the New York Stock
Exchange in the period. The top ten highest dividend yielding stocks were
then ranked by price from highest to lowest. The absolute lowest priced stock
was eliminated and the next five lowest priced stocks were selected for the
comparison. Total Return for each period was calculated by taking the
difference between period-end prices and prices at the end of the following
period (adjusted for any stock splits and corporate spinoffs) and adding
dividends for the period. Historical total returns thus represent actual
stocks and real time; the results illustrate what an investor would have
obtained had the investor been invested in the related stocks in the periods
indicated. Total Return does not take into consideration any sales charges,
commissions, expenses or taxes that will be incurred by a Trust.
Based on the total returns set forth in the table above, the average annual
total returns for the DJIA Five for the most recent complete three, five, ten,
twenty and twenty-five year periods were 33.27%, 29.23%, 24.79%, 22.87% and
22.03%, respectively. On the other hand, based on the total returns set forth in
the table above, the average annual total returns for the DJIA for the most
recent complete three, five, ten, twenty and twenty-five year periods were
29.86%, 21.82%, 18.41%, 16.33% and 13.01%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Strategic Five United States Trusts. Among other
factors, both stock prices (which may appreciate or depreciate) and dividends
(which may be increased, reduced or eliminated) will affect the returns. A
Unitholder in a Strategic Five United States Trust would not necessarily realize
as high a total return on an investment in the stocks upon which the
hypothetical returns shown above are based for the following reasons: the total
return figures shown above do not reflect sales charges, commissions, Trust
expenses or taxes; the Trusts are established at different times of the year;
the Trust may not be able to invest equally in the DJIA Five and may not be
fully invested at all times; and Equity Securities are often purchased or sold
at prices different from the closing prices used in buying and selling Units.
The chart below represents past performance of the DJIA and the DJIA Five
(but does not represent possible performance of the Strategic Five United States
Trusts which, as indicated above, include certain expenses and commissions not
included in the chart) and should not be considered indicative of future
results. Further, results are hypothetical. The chart assumes that all dividends
during a year (including those on stocks trading ex-dividend as of the last day
of the period) are reinvested at the end of that year and does not reflect sales
charges, commissions, expenses or income taxes. Based on the foregoing
assumptions, the average annual returns (which represent the percentage return
derived by taking the sum of the initial investment and all appreciation and
dividends for the specified investment period) during the 25 year period ended
December 31, 1997 were 22.03% and 13.01% for the DJIA Five and the DJIA,
respectively. There can be no assurance that a Strategic Five United States
Trust will outperform the DJIA over its life or over consecutive rollover
periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1973
----------------------------------------------------------------------
TWO YEAR
PERIOD ENDED
DECEMBER 31 DJIA FIVE DJIA
- ------------------ ---------------------- ----------------------
1974 $ 10,608 $ 6,668
1976 24,776 11,826
1978 24,739 10,602
1980 43,568 14,226
1982 56,342 17,287
1984 86,683 21,955
1986 162,921 37,000
1988 198,599 45,485
1990 201,056 59,560
1992 402,456 79,238
1994 612,833 97,082
1996 1,136,146 170,377
1998 thru 3/31
STRATEGIC THIRTY TRUST GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
The Strategic Thirty Trust consists of thirty stocks which include the common
stocks of the ten companies in each of the DJIA, FT Index and Hang Seng Index
having the highest dividend yield as of the close of business three business
days prior to the Initial Date of Deposit. The Strategic Thirty Trust consists
of common stocks of the following thirty companies:
The following table compares the hypothetical performance of the Ten Highest
Dividend Yielding Stocks for the DJIA, FT Index and Hang Seng Index and a
combination of the Ten Highest Dividend Yielding Stocks in these indices (the
"Combined Thirty") with the performance of the DJIA, FT Index and Hang Seng
Index and a combination of the three indices (the "Average of Total Returns")
applying the Trust strategy on an annual basis in the past 20 years, as of
December 31 in each of those years (and as of the end of the most recent
quarter). The Average of Total Returns statistics are based on a geometric,
unweighted average of the companies included in such indices, while the
statistics for the Combined Thirty are based on an approximately equal
distribution (based on market price) of each of the thirty stocks. The figures
have been adjusted to take into account the effect of currency exchange rate
fluctuations of the U.S. dollar. It should be noted that the common stocks
comprising the Average of Total Returns may not be the same stocks from year to
year and may not be the same common stocks as those included in the Strategic
Thirty Global Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS (2)
STRATEGY TOTAL RETURNS INDEX TOTAL RETURNS
10 HIGHEST DIVIDEND YIELDING STOCKS (1)
--------------------------------------
AVERAGE
HANG SENG COMBINED HANG SENG OF TOTAL
YEAR DJIA FT INDEX INDEX THIRTY DJIA FT INDEX INDEX RETURNS(3)
------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1978 0.12% 9.99% 17.92% 9.34% 2.69% 8.57% 23.27% 11.51%
1979 12.37 4.57 67.81 28.25 10.52 10.46 80.78 33.92
1980 27.23 28.22 38.03 31.16 21.41 33.20 67.12 40.58
1981 7.52 (5.56) (5.87) (1.30) (3.40) (4.62) (11.61) (6.54)
1982 26.03 4.23 (38.76) (2.83) 25.79 0.24 (48.01) (7.33)
1983 38.75 44.54 (3.30) 26.66 25.65 22.23 (0.03) 15.95
1984 11.82 7.81 57.36 25.66 1.08 2.63 45.12 16.28
1985 29.45 75.73 43.30 49.49 32.78 55.28 52.26 46.77
1986 35.77 27.21 62.35 41.78 26.92 24.34 52.17 34.48
1987 5.93 46.38 (1.22) 17.03 6.02 38.04 (7.09) 12.32
1988 24.75 12.65 43.24 26.88 15.95 6.59 20.70 14.41
1989 25.08 25.66 7.85 19.53 31.71 22.61 10.36 21.56
1990 (7.57) 15.03 6.02 4.49 (0.58) 10.21 11.98 7.20
1991 34.86 8.95 51.11 31.64 23.93 15.15 48.59 29.22
1992 7.85 4.72 38.79 17.12 7.35 (2.22) 33.54 12.89
1993 26.93 36.40 109.72 57.68 16.74 19.38 123.15 53.09
1994 4.12 2.49 (35.60) (9.66) 4.95 1.75 (29.26) (7.52)
1995 36.58 12.03 16.07 21.56 36.49 18.03 27.34 27.29
1996 28.05 7.75 33.68 23.16 28.58 8.67 37.74 25.00
1997 21.98 10.66 (17.04) 5.20 24.78 12.21 (16.92) 6.69
1998 thru 3/31
</TABLE>
- --------------------------------------------------------------------------------
(1)The Ten Highest Dividend Yielding Stocks in the DJIA, FT Index and Hang Seng
Index, respectively, for any given period were selected by ranking the
dividend yields for each of the stocks in the respective index, as of the
beginning of the period, and dividing by that stock's market value on the
first trading day on the exchange where that stock principally trades in the
given period. The Combined Thirty merely averages the Total Return of the
stocks which comprise the Ten Highest Dividend Yielding Stocks in the DJIA,
FT Index and Hang Seng Index, respectively.
(2)Total Return represents the sum of the percentage change in market value of
each group of stocks between the first trading day of a period and the total
dividends paid on each group of stocks during the period divided by the
opening market value of each group of stocks as of the first trading day of a
period. Total Return does not take into consideration any sales charges,
commission, expenses or taxes. Total Return does not take into consideration
any reinvestment of dividend income and all returns are stated in terms of
the United States dollar. Although the Trust seeks to achieve a better
performance than its respective index as a whole, there can be no assurance
that the Trust will achieve a better performance over its life or over
consecutive rollover periods, if available.
(3)The Average of Total Returns for the individual years are calculated by using
a simple arithmetic average of the three indices for each period. There is no
published index combining the total returns of the three indices. It is not
representative of any recognized index and is purely hypothetical.
Based on the total returns set forth in the table above, the average annual
total returns for the Combined Thirty for the most recent complete three, five,
ten and twenty year periods were 16.35%, 17.54%, 18.55% and 19.97%,
respectively. On the other hand, based on the total returns set forth in the
table above, the average annual total returns for the combined DJIA, FT Index
and Hang Seng Index for the most recent complete three, five, ten and twenty
year periods were 19.29%, 19.17%, 17.99% and 18.21%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Strategic Thirty Global Trust. Among other
factors, both stock prices (which may appreciate or depreciate) and dividends
(which may be increased, reduced or eliminated) will affect the returns. Had the
portfolio been available over the period indicated in the above table, after
deductions for expenses and sales charges and not accounting for taxes, it would
have underperformed the DJIA, the FT Index and the Hang Seng Index in 6, 8 and
14 out of the last 20 calendar years, respectively. Had the portfolio been
available over the periods indicated in the above table, after deductions for
expenses and sales charges and not accounting for taxes, it would have
underperformed the combined DJIA, FT Index and Hang Seng Index in 9 of the last
20 calendar years. There can be no assurance that such Trust will outperform the
related indices over the life of such Trust or over consecutive rollover
periods, if available. A Unitholder in the Strategic Thirty Global Trust would
not necessarily realize as high a total return on an investment in the stocks
upon which the hypothetical returns shown above are based for the following
reasons: the total return figures shown above do not reflect sales charges,
commissions, Trust expenses or taxes; the Trusts are established at different
times of the year; the Trust may not be able to invest equally in the Combined
Thirty and may not be fully invested at all times; Equity 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.
The chart below represents past performance of the Average of Total Returns
and the Combined Thirty (but not the Strategic Thirty Global Trust which as
indicated above includes certain expenses and commissions not included in the
chart) and should not be considered indicative of future results. Further,
results are hypothetical. The chart assumes that all dividends during a year are
reinvested at the end of that year and does not reflect commissions, custodial
fees or income taxes. The annual figures in the following table have been
adjusted to take into account the effect of currency exchange rate fluctuations
of the U.S. dollar as described in the footnotes below. Based on the foregoing
assumptions, the compound annual returns (which represent the percentage return
derived by taking the sum of the initial investment and all appreciation and
dividends for the specified investment period) during the 20 year period ended
December 31, 1997 referred to in the table were 19.97% and 18.21% for the
Combined Thirty and the Average of Total Returns, respectively. There can be no
assurance that the Strategic Thirty Global Trust will outperform the Average of
Total Returns over its life or over consecutive rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1978(1)(2)
----------------------------------------------------------------------
COMBINED AVERAGE OF
PERIOD THIRTY TOTAL RETURNS
------------------ ---------------------- ----------------------
1978 $ 10,934 $ 11,151
1979 14,023 14,933
1980 18,393 20,993
1981 18,153 19,619
1982 17,639 18,182
1983 22,342 21,082
1984 28,076 24,513
1985 41,971 35,979
1986 59,505 48,383
1987 69,639 54,346
1988 88,358 62,179
1989 105,615 75,585
1990 110,360 81,029
1991 145,278 104,709
1992 170,150 118,206
1993 268,298 180,961
1994 242,372 167,353
1995 294,627 213,018
1996 362,862 266,266
1997 381,731 284,079
1998 thru 3/31
- --------------------------------------------------------------------------------
(1)The $10,000 initial investment was converted into British pounds sterling and
Hong Kong dollars, as applicable, using the opening exchange rate at the
beginning of each period.
(2)The period-end total in British pounds sterling and Hong Kong dollars, as
applicable, was converted into U.S. dollars using the ending exchange rate.
This amount was then converted back into British pounds sterling and Hong
Kong dollars, as applicable, using the opening exchange rate at the beginning
of the next period.
The following table compares the hypothetical average annual total returns of
the Ten Highest Dividend Yielding Stocks for the DJIA, FT Index and Hang Seng
Index and a combination of the Ten Highest Dividend Yielding Stocks in these
indices (the "Combined Thirty") with the average annual total returns of the
DJIA, FT Index and Hang Seng Index and a combination of the three indices (the
"Average of Total Returns") applying the Trust strategy on a biennial basis in
the past 20 years, as of December 31 in each two-year period. The Average of
Total Returns statistics are based on a geometric, unweighted average of the
companies included in such indices, while the statistics for the Combined Thirty
are based on an approximately equal distribution (based on market price) of each
of the thirty stocks. The figures have been adjusted to take into account the
effect of currency exchange rate fluctuations of the U.S. dollar. It should be
noted that the common stocks comprising the Average of Total Returns may not be
the same stocks from year to year and may not be the same common stocks as those
included in the Strategic Thirty Global Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS (2)
STRATEGY TOTAL RETURNS INDEX TOTAL RETURNS
10 HIGHEST DIVIDEND YIELDING STOCKS (1)
--------------------------------------
TWO-YEAR AVERAGE
PERIOD ENDED HANG SENG COMBINED HANG SENG OF TOTAL
DECEMBER 31 DJIA FT INDEX INDEX THIRTY DJIA FT INDEX INDEX RETURNS(3)
------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1979 5.81% 5.18% 32.58% 14.78% 6.53% 9.51% 49.28% 22.20%
1981 14.37 5.54 12.31 10.85 8.30 12.71 21.54 14.62
1983 30.19 24.85 (19.06) 12.53 25.72 10.69 (27.91) 3.66
1985 22.21 42.77 45.94 38.51 15.85 26.24 48.65 30.64
1987 20.81 39.16 27.26 30.34 16.00 31.01 18.90 22.90
1989 26.66 15.88 25.82 23.10 23.58 14.32 15.41 17.93
1991 12.21 13.33 16.60 14.46 11.00 12.65 28.99 17.70
1993 18.83 17.81 52.10 29.59 11.95 8.04 72.63 31.46
1995 19.54 3.53 (19.45) 1.57 19.69 9.59 (5.09) 8.50
1997 30.79 7.73 3.03 15.05 26.67 10.43 6.97 15.48
1998 thru 3/31
</TABLE>
- --------------------------------------------------------------------------------
(1)The Ten Highest Dividend Yielding Stocks in the DJIA, FT Index and Hang Seng
Index, respectively, for any given period were selected by ranking the
dividend yields for each of the stocks in the respective index, as of the
beginning of the period, and dividing by that stock's market value on the
first trading day on the exchange where that stock principally trades in the
given period. The Combined Thirty merely averages the Total Return of the
stocks which comprise the Ten Highest Dividend Yielding Stocks in the DJIA,
FT Index and Hang Seng Index, respectively.
(2)Total Return represents the sum of the percentage change in market value of
each group of stocks between the first trading day of a period and the total
dividends paid on each group of stocks during the period divided by the
opening market value of each group of stocks as of the first trading day of a
period. Total Return does not take into consideration any sales charges,
commission, expenses or taxes. Total Return does not take into consideration
any reinvestment of dividend income and all returns are stated in terms of
the United States dollar. Although the Trust seeks to achieve a better
performance than its respective index as a whole, there can be no assurance
that the Trust will achieve a better performance over its life or over
consecutive rollover periods, if available.
(3)The Average of Total Returns for the periods are calculated by using a simple
arithmetic average of the three indices for each period. There is no
published index combining the total returns of the three indices. It is not
representative of any recognized index and is purely hypothetical.
Based on the total returns set forth in the table above, the average annual
total returns for the Combined Thirty for the most recent complete three, five,
ten and twenty year periods were 13.80%, 13.81%, 16.07% and 18.47%,
respectively. On the other hand, based on the total returns set forth in the
table above, the average annual total returns for the combined DJIA, FT Index
and Hang Seng Index for the most recent complete three, five, ten and twenty
year periods were 19.29%, 19.17%, 17.99% and 18.21%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Strategic Thirty Global Trust. Among other
factors, both stock prices (which may appreciate or depreciate) and dividends
(which may be increased, reduced or eliminated) will affect the returns. There
can be no assurance that such Trust will outperform the related indices over the
life of such Trust or over consecutive rollover periods, if available. A
Unitholder in the Strategic Thirty Global Trust would not necessarily realize as
high a total return on an investment in the stocks upon which the hypothetical
returns shown above are based for the following reasons: the total return
figures shown above do not reflect sales charges, commissions, Trust expenses or
taxes; the Trusts are established at different times of the year; the Trust may
not be able to invest equally in the Combined Thirty and may not be fully
invested at all times; Equity 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.
The chart below represents past performance of the Average of Total Returns
and the Combined Thirty (but not the Strategic Thirty Global Trust which as
indicated above includes certain expenses and commissions not included in the
chart) and should not be considered indicative of future results. Further,
results are hypothetical. The chart assumes that all dividends during a year are
reinvested at the end of that year and does not reflect commissions, custodial
fees or income taxes. The annual figures in the following table have been
adjusted to take into account the effect of currency exchange rate fluctuations
of the U.S. dollar as described in the footnotes below. Based on the foregoing
assumptions, the compound annual returns (which represent the percentage return
derived by taking the sum of the initial investment and all appreciation and
dividends for the specified investment period) during the 20 year period ended
December 31, 1997 referred to in the table were 18.47% and 18.21% for the
Combined Thirty and the Average of Total Returns, respectively. There can be no
assurance that the Strategic Thirty Global Trust will outperform the Average of
Total Returns over its life or over consecutive rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1978(1)(2)
----------------------------------------------------------------------
TWO YEAR
PERIOD ENDED COMBINED AVERAGE OF
DECEMBER 31 THIRTY TOTAL RETURNS
- ------------------ ---------------------- ----------------------
1979 $ 13,174 $ 14,933
1981 16,188 19,619
1983 20,500 21,082
1985 39,326 35,979
1987 66,810 54,346
1989 101,248 75,585
1991 132,636 104,709
1993 222,742 180,961
1995 229,785 213,018
1997 296,568 284,079
1998 thru 3/31
- --------------------------------------------------------------------------------
(1)The $10,000 initial investment was converted into British pounds sterling and
Hong Kong dollars, as applicable, using the opening exchange rate at the
beginning of each period.
(2)The period-end total in British pounds sterling and Hong Kong dollars, as
applicable, was converted into U.S. dollars using the ending exchange rate.
This amount was then converted back into British pounds sterling and Hong
Kong dollars, as applicable, using the opening exchange rate at the beginning
of the next period.
STRATEGIC FIFTEEN TRUST GLOBAL PORTFOLIO
- --------------------------------------------------------------------------------
The Strategic Fifteen Trust consists of common stocks of fifteen companies
comprising the five stocks in each of the DJIA, FT Index and Hang Seng Index
with the 2nd through 6th lowest per share stock price of the ten companies in
each index having the highest dividend yield as of the close of business three
business days prior to the Initial Date of Deposit. The Strategic Fifteen Trust
consists of common stocks of the following fifteen companies:
The following table compares the hypothetical performance of the 2nd through
6th Lowest Priced of the Ten Highest Dividend Yielding Stocks in the DJIA, FT
Index and Hang Seng Index and a combination of the 2nd through 6th Lowest Priced
of the Ten Highest Dividend Yielding Stocks in these indices (the "Combined
Fifteen") with the performance of the DJIA, FT Index and Hang Seng Index and a
combination of the three indices (the "Average of Total Returns") applying the
Trust strategy on an annual basis in the past 20 years, as of December 31 in
each of those years (and as of the end of the most recent quarter). The Average
of Total Returns statistics are based on a geometric, unweighted average of the
companies included in such indices, while the statistics for the Combined
Fifteen are based on an approximately equal distribution (based on market price)
of each of the fifteen stocks. The figures have been adjusted to take into
account the effect of currency exchange rate fluctuations of the U.S. dollar. It
should be noted that the common stocks comprising the Average of Total Returns
may not be the same stocks from year to year and may not be the same common
stocks as those included in the Strategic Fifteen Global Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS (2)
STRATEGY TOTAL RETURNS INDEX TOTAL RETURNS
2ND THROUGH 6TH LOWEST PRICED
OF THE 10 HIGHEST DIVIDEND YIELDING STOCKS (1)
--------------------------------------
AVERAGE OF
HANG SENG COMBINED HANG SENG TOTAL
YEAR DJIA FT INDEX INDEX FIFTEEN DJIA FT INDEX INDEX RETURNS(3)
------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1978 0.76% 11.07% 15.43% 9.09% 2.69% 8.57% 23.27% 11.51%
1979 19.86 8.37 63.10 30.44 10.52 10.46 80.78 33.92
1980 32.33 29.67 54.56 38.85 21.41 33.20 67.12 40.58
1981 3.15 (9.78) (10.57) (5.73) (3.40) (4.62) (11.61) (6.54)
1982 48.11 24.16 (44.47) 9.27 25.79 0.24 (48.01) (7.33)
1983 43.50 48.30 (4.07) 29.24 25.65 22.23 (0.03) 15.95
1984 11.60 7.76 35.83 18.40 1.08 2.63 45.12 16.28
1985 37.00 80.71 40.96 52.89 32.78 55.28 52.26 46.77
1986 36.10 19.72 57.82 37.88 26.92 24.34 52.17 34.48
1987 (2.75) 45.69 (0.89) 14.02 6.02 38.04 (7.09) 12.32
1988 22.65 13.20 57.20 31.02 15.95 6.59 20.70 14.41
1989 10.49 30.75 7.10 16.11 31.71 22.61 10.36 21.56
1990 (20.71) 10.98 7.54 (0.73) (0.58) 10.21 11.98 7.20
1991 56.02 5.90 65.96 42.63 23.93 15.15 48.59 29.22
1992 24.96 2.25 45.54 24.25 7.35 (2.22) 33.54 12.89
1993 38.67 38.27 106.81 61.25 16.74 19.38 123.15 53.09
1994 3.33 3.67 (30.46) (7.82) 4.95 1.75 (29.26) (7.52)
1995 42.57 2.62 4.48 16.56 36.49 18.03 27.34 27.29
1996 32.06 (0.49) 26.55 19.37 28.58 8.67 37.74 25.00
1997 27.68 (9.45) (16.82) 0.47 24.78 12.21 (16.92) 6.69
1998 thru 3/31
</TABLE>
- --------------------------------------------------------------------------------
(1)The Second through Sixth Lowest Priced Stocks of the Ten Highest Dividend
Yielding Stocks in the DJIA, FT Index and Hang Seng Index, respectively, for
any given period were selected by ranking the dividend yields for each of the
stocks in the respective index, as of the beginning of the period, and
dividing by that stock's market value on the first trading day on the
exchange where that stock principally trades in the given period. The
Combined Fifteen merely averages the Total Return of the stocks which
comprise the Second through Sixth Lowest Priced Stocks of the Ten Highest
Dividend Yielding Stocks in the DJIA, FT Index and Hang Seng Index,
respectively.
(2)Total Return represents the sum of the percentage change in market value of
each group of stocks between the first trading day of a period and the total
dividends paid on each group of stocks during the period divided by the
opening market value of each group of stocks as of the first trading day of a
period. Total Return does not take into consideration any sales charges,
commission, expenses or taxes. Total Return does not take into consideration
any reinvestment of dividend income and all returns are stated in terms of
the United States dollar. Although the Trust seeks to achieve a better
performance than its respective index as a whole, there can be no assurance
that the Trust will achieve a better performance over its life or over
consecutive rollover periods, if available.
(3)The Average of Total Returns for the individual years are calculated by using
a simple arithmetic average of the three indices for each period. There is no
published index combining the total returns of the three indices. It is not
representative of any recognized index and is purely hypothetical.
Based on the total returns set forth in the table above, the average annual
total returns for the Combined Fifteen for the most recent complete three, five,
ten and twenty year periods were 11.81%, 15.75%, 18.72% and 20.49%,
respectively. On the other hand, based on the total returns set forth in the
table above, the average annual total returns for the combined DJIA, FT Index
and Hang Seng Index for the most recent complete three, five, ten and twenty
year periods were 19.29%, 19.17%, 17.99% and 18.21%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Strategic Fifteen Trust. Among other factors,
both stock prices (which may appreciate or depreciate) and dividends (which may
be increased, reduced or eliminated) will affect the returns. Had the portfolio
been available over the period indicated in the above table, after deductions
for expenses and sales charges and not accounting for taxes, it would have
underperformed the DJIA, the FT Index and the Hang Seng Index in 8, 7 and 11 out
of the last 20 calendar years, respectively. Had the portfolio been available
over the periods indicated in the above table, after deductions for expenses and
sales charges and not accounting for taxes, it would have underperformed the
combined DJIA, FT Index and Hang Seng Index in 9 of the last 20 calendar years.
There can be no assurance that such Trust will outperform the related indices
over the life of such Trust or over consecutive rollover periods, if available.
A Unitholder in the Strategic Fifteen Global Trust would not necessarily realize
as high a total return on an investment in the stocks upon which the
hypothetical returns shown above are based for the following reasons: the total
return figures shown above do not reflect sales charges, commissions, Trust
expenses or taxes; the Trusts are established at different times of the year;
the Trust may not be able to invest equally in the Combined Fifteen and may not
be fully invested at all times; Equity 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.
The chart below represents past performance of the Average of Total Returns
and the Combined Fifteen (but not the Strategic Fifteen Global Trust which as
indicated above includes certain expenses and commissions not included in the
chart) and should not be considered indicative of future results. Further,
results are hypothetical. The chart assumes that all dividends during a year are
reinvested at the end of that year and does not reflect commissions, custodial
fees or income taxes. The annual figures in the following table have been
adjusted to take into account the effect of currency exchange rate fluctuations
of the U.S. dollar as described in the footnotes below. Based on the foregoing
assumptions, the compound annual returns (which represent the percentage return
derived by taking the sum of the initial investment and all appreciation and
dividends for the specified investment period) during the 20 year period ended
December 31, 1997 referred to in the table were 20.49% and 18.21% for the
Combined Fifteen and the Average of Total Returns, respectively. There can be no
assurance that the Strategic Fifteen Global Trust will outperform the Average of
Total Returns over its life or over consecutive rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1978(1)(2)
----------------------------------------------------------------------
AVERAGE
COMBINED OF TOTAL
PERIOD FIFTEEN RETURNS
------------------ ---------------------- ----------------------
1978 $ 10,909 $ 11,151
1979 14,230 14,933
1980 19,758 20,993
1981 18,626 19,619
1982 20,351 18,182
1983 26,303 21,082
1984 31,142 24,513
1985 47,613 35,979
1986 65,648 48,383
1987 74,850 54,346
1988 98,066 62,179
1989 113,868 75,585
1990 113,036 81,029
1991 161,220 104,709
1992 200,316 118,206
1993 323,010 180,961
1994 297,750 167,353
1995 347,048 213,018
1996 414,283 266,266
1997 416,230 284,079
1998 thru 3/31
- --------------------------------------------------------------------------------
(1)The $10,000 initial investment was converted into British pounds sterling and
Hong Kong dollars, as applicable, using the opening exchange rate at the
beginning of each period.
(2)The period-end total in British pounds sterling and Hong Kong dollars, as
applicable, was converted into U.S. dollars using the ending exchange rate.
This amount was then converted back into British pounds sterling and Hong
Kong dollars, as applicable, using the opening exchange rate at the beginning
of the next period. The following table compares the hypothetical average
annual total returns of the 2nd through 6th Lowest Priced of the Ten Highest
Dividend Yielding
Stocks in the DJIA, FT Index and Hang Seng Index and a combination of the 2nd
through 6th Lowest Priced of the Ten Highest Dividend Yielding Stocks in these
indices (the "Combined Fifteen") with the average annual total returns of the
DJIA, FT Index and Hang Seng Index and a combination of the three indices (the
"Average of Total Returns") applying the Trust strategy on a biennial basis in
the past 20 years, as of December 31 in each two-year period. The Average of
Total Returns statistics are based on a geometric, unweighted average of the
companies included in such indices, while the statistics for the Combined
Fifteen are based on an approximately equal distribution (based on market price)
of each of the fifteen stocks. The figures have been adjusted to take into
account the effect of currency exchange rate fluctuations of the U.S. dollar. It
should be noted that the common stocks comprising the Average of Total Returns
may not be the same stocks from year to year and may not be the same common
stocks as those included in the Strategic Fifteen Global Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS (2)
STRATEGY TOTAL RETURNS INDEX TOTAL RETURNS
2ND THROUGH 6TH LOWEST PRICED
OF THE 10 HIGHEST DIVIDEND YIELDING STOCKS (1)
--------------------------------------
TWO YEAR AVERAGE OF
PERIOD ENDED HANG SENG COMBINED HANG SENG TOTAL
DECEMBER 31 DJIA FT INDEX INDEX FIFTEEN DJIA FT INDEX INDEX RETURNS(3)
------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1979 6.22% 5.44% 31.07% 14.56% 6.53% 9.51% 49.28% 22.20%
1981 13.67 9.60 22.53 15.33 8.30 12.71 21.54 14.62
1983 44.12 29.82 (18.73) 19.93 25.72 10.69 (27.91) 3.66
1985 21.56 46.50 29.42 33.99 15.85 26.24 48.65 30.64
1987 25.01 36.82 26.00 30.72 16.00 31.01 18.90 22.90
1989 25.46 17.41 30.11 25.01 23.58 14.32 15.41 17.93
1991 15.64 11.56 15.18 15.64 11.00 12.65 28.99 17.70
1993 35.39 19.39 62.96 39.30 11.95 8.04 72.63 31.46
1995 20.13 1.63 (20.97) 0.56 19.69 9.59 (5.09) 8.50
1997 23.96 2.05 0.96 11.80 26.67 10.43 6.97 15.48
1998 thru 3/31
</TABLE>
- --------------------------------------------------------------------------------
(1)The Second through Sixth Lowest Priced Stocks of the Ten Highest Dividend
Yielding Stocks in the DJIA, FT Index and Hang Seng Index, respectively, for
any given period were selected by ranking the dividend yields for each of the
stocks in the respective index, as of the beginning of the period, and
dividing by that stock's market value on the first trading day on the
exchange where that stock principally trades in the given period. The
Combined Fifteen merely averages the Total Return of the stocks which
comprise the Second through Sixth Lowest Priced Stocks of the Ten Highest
Dividend Yielding Stocks in the DJIA, FT Index and Hang Seng Index,
respectively.
(2)Total Return represents the sum of the percentage change in market value of
each group of stocks between the first trading day of a period and the total
dividends paid on each group of stocks during the period divided by the
opening market value of each group of stocks as of the first trading day of a
period. Total Return does not take into consideration any sales charges,
commission, expenses or taxes. Total Return does not take into consideration
any reinvestment of dividend income and all returns are stated in terms of
the United States dollar. Although the Trust seeks to achieve a better
performance than its respective index as a whole, there can be no assurance
that the Trust will achieve a better performance over its life or over
consecutive rollover periods, if available.
(3)The Average of Total Returns for the periods are calculated by using a simple
arithmetic average of the three indices for each period. There is no
published index combining the total returns of the three indices. It is not
representative of any recognized index and is purely hypothetical.
Based on the total returns set forth in the table above, the average annual
total returns for the Combined Fifteen for the most recent complete three, five,
ten and twenty year periods were 9.59%, 13.64%, 17.27% and 19.93%, respectively.
On the other hand, based on the total returns set forth in the table above, the
average annual total returns for the combined DJIA, FT Index and Hang Seng Index
for the most recent complete three, five, ten and twenty year periods were
19.29%, 19.17%, 17.99% and 18.21%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Strategic Fifteen Trust. Among other factors,
both stock prices (which may appreciate or depreciate) and dividends (which may
be increased, reduced or eliminated) will affect the returns. There can be no
assurance that such Trust will outperform the related indices over the life of
such Trust or over consecutive rollover periods, if available. A Unitholder in
the Strategic Fifteen Global Trust would not necessarily realize as high a total
return on an investment in the stocks upon which the hypothetical returns shown
above are based for the following reasons: the total return figures shown above
do not reflect sales charges, commissions, Trust expenses or taxes; the Trusts
are established at different times of the year; the Trust may not be able to
invest equally in the Combined Fifteen and may not be fully invested at all
times; Equity 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.
The chart below represents past performance of the Average of Total Returns
and the Combined Fifteen (but not the Strategic Fifteen Global Trust which as
indicated above includes certain expenses and commissions not included in the
chart) and should not be considered indicative of future results. Further,
results are hypothetical. The chart assumes that all dividends during a year are
reinvested at the end of that year and does not reflect commissions, custodial
fees or income taxes. The annual figures in the following table have been
adjusted to take into account the effect of currency exchange rate fluctuations
of the U.S. dollar as described in the footnotes below. Based on the foregoing
assumptions, the compound annual returns (which represent the percentage return
derived by taking the sum of the initial investment and all appreciation and
dividends for the specified investment period) during the 20 year period ended
December 31, 1997 were 19.93% and 18.21% for the Combined Fifteen and the
Average of Total Returns, respectively. There can be no assurance that the
Strategic Fifteen Global Trust will outperform the Average of Total Returns over
its life or over consecutive rollover periods, if available.
VALUE OF $10,000 INVESTED JANUARY 1, 1978(1)(2)
----------------------------------------------------------------------
TWO YEAR AVERAGE
PERIOD ENDED COMBINED OF TOTAL
DECEMBER 31, FIFTEEN RETURNS
------------------ ---------------------- ----------------------
1979 $ 13,123 $ 14,933
1981 17,457 19,619
1983 25,107 21,082
1985 45,074 35,979
1987 77,021 54,346
1989 120,355 75,585
1991 160,953 104,709
1993 312,341 180,961
1995 315,838 213,018
1997 378,987 284,079
1998 thru 3/31
- --------------------------------------------------------------------------------
(1)The $10,000 initial investment was converted into British pounds sterling and
Hong Kong dollars, as applicable, using the opening exchange rate at the
beginning of each period.
(2)The period-end total in British pounds sterling and Hong Kong dollars, as
applicable, was converted into U.S. dollars using the ending exchange rate.
This amount was then converted back into British pounds sterling and Hong
Kong dollars, as applicable, using the opening exchange rate at the beginning
of the next period.
STRATEGIC PICKS OPPORTUNITY TRUST
- --------------------------------------------------------------------------------
The Strategic Picks Opportunity Trust consists of a diversified portfolio of
10 different issues of Securities selected by implementing the following
investment strategy. Beginning with the MSCI USA Index, all stocks of companies
in the financial or utility sectors and stocks included in the Dow Jones
Industrial Average are removed. This pool of stocks is screened for only those
companies that have positive one- and three-year sales and earnings growth rates
and two years positive dividend growth. The remaining stocks are ranked highest
to lowest by annual trading volume and only the top 75% are retained. The
remaining stocks, which then comprise the "Strategic Picks Subset," are ranked
by dividend yield and the ten highest-yielding stocks are selected for the
Strategic Picks Trust portfolio. All of the Securities are listed on a national
securities exchange, the NASDAQ National Market System or are traded in the
over-the-counter market. The following is a general description of each of the
companies that are included in the Strategic Picks Trust.
The following table sets forth a comparison of the hypothetical total return
of the ten highest yielding common stocks selected in accordance with the
investment strategy utilized by the Strategic Picks Trust (the "Strategy
Stocks") applied on an annual basis with the one-year total returns of all
common stocks comprising the S&P 500, the Dow Jones Industrial Average and the
MSCI USA Index. It should be noted that the common stocks comprising the
Strategy Stocks may not be the same stocks from year to year and may not be the
same common stocks as those included in the Strategic Picks Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS(1)*
STANDARD & POOR'S DOW JONES
YEAR STRATEGY STOCKS 500 INDEX INDUSTRIAL AVERAGE MSCI USA INDEX
------------- ---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
1978 13.26% 6.39% 2.69% 6.00%
1979 17.00 18.19 10.52 13.86
1980 40.64 31.52 21.41 27.97
1981 5.09 (4.84) (3.40) (3.50)
1982 39.84 20.37 25.79 20.13
1983 17.66 22.31 25.65 21.11
1984 10.89 5.97 1.08 5.71
1985 46.11 31.05 32.78 31.04
1986 34.86 18.54 26.92 17.02
1987 11.38 5.67 6.02 4.41
1988 16.05 16.34 15.95 15.34
1989 31.87 31.21 31.71 30.21
1990 0.52 (3.13) (0.58) (1.89)
1991 47.88 30.00 23.93 30.17
1992 2.26 7.43 7.35 7.06
1993 7.32 9.92 16.74 9.82
1994 9.91 1.28 4.95 2.05
1995 38.10 37.11 36.49 37.04
1996 23.90 22.68 28.58 23.36
1997 28.64 33.10 24.78 33.35
1998 thru 3/31
</TABLE>
* Source: Barron's, Fact Set, Bloomberg, Morgan Stanley Capital International
and The Wall Street Journal. The Sponsor has not independently verified this
data but has no reason to believe that this data is incorrect in any material
respect.
- --------------------------------------------------------------------------------
(1)The Strategy Stocks for each period were identified by ranking the dividend
yield for each of the stocks in the Strategic Picks Subset by annualizing the
last dividend paid (the last dividend declared was used in cases when the
stock was trading ex-dividend as of the last day of the period) and dividing
the result by the stock's market value on the first day of trading on the New
York Stock Exchange in the period. Total Return for each period was
calculated by taking the difference between period-end prices and prices at
the end of the following period (adjusted for any stock splits and corporate
spinoffs) and adding dividends for the period. If the dividend yield for two
companies was the same in any period, the company with the largest market
capitalization was utilized. Historical total returns thus represent actual
stocks and real time; the results illustrate what an investor would have
obtained had the investor been invested in the related stocks in the periods
indicated. Total Return does not take into consideration any sales charges,
commissions, expenses or taxes that will be incurred by the Strategic Picks
Trust or Unitholders. Based on the hypothetical total returns set forth in
the table above, the average annual total returns for the Strategy Stocks for
the most recent three,
five, ten and twenty calendar year periods were 30.08%, 21.02%, 19.70% and
21.28%, respectively. Based on the hypothetical total returns set forth in the
table above, the average annual total returns for the S&P 500 for the most
recent three, five, ten and twenty calendar year periods were 30.82%, 20.04%,
17.80% and 16.37%, respectively. Based on the hypothetical returns set forth in
the table above, the average annual total returns for the DJIA for the most
recent three, five, ten and twenty calendar year periods were 29.86%, 21.82%,
18.41% and 16.33%, respectively. Based on the hypothetical returns set forth in
the table above, the average annual total returns for the MSCI USA Index for the
most recent three, five, ten and twenty calendar year periods were 31.12%,
20.37%, 17.90% and 15.87%, respectively.
The hypothetical returns shown above represent past performance and are not
guarantees of future performance and should not be used as a predictor of
returns to be expected in connection with the Strategic Picks Trust. Among other
factors, both stock prices (which may appreciate or depreciate) and dividends
(which may be increased, reduced or eliminated) will affect the returns. Had the
portfolio been available over the periods indicated in the above table, after
deductions for expenses and sales charges and not accounting for taxes, it would
have underperformed the S&P 500, the DJIA and the MSCI USA Index in 6, 4 and 4
of the last 20 calendar years, respectively. There can be no assurance that the
Strategic Picks Trust will outperform the S&P 500, the Dow Jones Industrial
Average or the MSCI USA Index over the life of such Trust or over consecutive
rollover periods, if available. A Unitholder would not necessarily realize as
high a total return on an investment in the stocks upon which the hypothetical
returns shown above are based for the following reasons: the hypothetical total
return figures shown above do not reflect sales charges, commissions, Trust
expenses or taxes; the Trusts are established at different times of the year;
the Trust may not be able to invest equally in the Strategy Stocks and may not
be fully invested at all times; and Equity Securities are often purchased or
sold at prices different from the closing prices used in buying and selling
Units.
The chart below represents past performance of the Strategy Stocks, S&P 500,
the Dow Jones Industrial Average and the MSCI USA Index (but does not represent
possible performance of the Strategic Picks Trust which, as indicated above,
includes certain expenses and commissions not included in the chart) and should
not be considered indicative of future results. Further, results are
hypothetical. The chart assumes that all dividends during a year (including
those on stocks trading ex-dividend as of the last day of the year) are
reinvested at the end of that year and does not reflect sales charges,
commissions, expenses or income taxes. Based on the foregoing assumptions, the
average annual returns (which represent the percentage return derived by taking
the sum of the initial investment and all appreciation and dividends for the
specified investment period) during the period ended December 31, 1997 were
21.28%, 16.37%, 16.33% and 15.87% for the Strategy Stocks, the S&P 500, the Dow
Jones Industrial Average and the MSCI USA Index, respectively. There can be no
assurance that the Strategic Picks Trust will outperform the S&P 500, the Dow
Jones Industrial Average or the MSCI USA Index over its life or over consecutive
rollover periods, if available.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTED JANUARY 1, 1978
--------------------------------------------------------------------------------------------------------
STANDARD & DOW JONES MSCI
STRATEGY POOR'S 500 INDUSTRIAL USA
PERIOD STOCKS INDEX AVERAGE INDEX
------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
1978 $ 11,326 $ 10,639 $ 10,269 $ 10,600
1979 13,251 12,574 11,349 12,069
1980 18,637 16,538 13,779 15,445
1981 19,585 15,737 13,311 14,904
1982 27,388 18,943 16,744 17,905
1983 32,225 23,169 21,038 21,684
1984 35,734 24,552 21,265 22,922
1985 52,211 32,176 28,236 30,038
1986 70,412 38,141 35,837 35,150
1987 78,425 40,304 37,995 36,700
1988 91,012 46,889 44,055 42,330
1989 120,018 61,523 58,025 55,118
1990 120,642 59,598 57,688 54,076
1991 178,406 77,477 71,493 70,391
1992 182,438 83,234 76,748 75,360
1993 195,792 91,490 89,596 82,761
1994 215,195 92,661 94,031 84,457
1995 297,184 127,048 128,342 115,740
1996 368,211 155,863 165,022 142,777
1997 473,667 207,453 205,915 190,393
1998 thru 3/31
</TABLE>
The following table sets forth a comparison of the hypothetical average
annual total returns of the ten highest yielding common stocks selected in
accordance with the investment strategy utilized by the Strategic Picks Trust
(the "Strategy Stocks") applied on a biennial basis with the two-year average
annual total returns of all common stocks comprising the S&P 500, the Dow Jones
Industrial Average and the MSCI USA Index. It should be noted that the common
stocks comprising the Strategy Stocks may not be the same stocks from period to
period and may not be the same common stocks as those included in the Strategic
Picks Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS(1)*
TWO YEAR
PERIOD
ENDED STANDARD & POOR'S DOW JONES
DECEMBER 31 STRATEGY STOCKS 500 INDEX INDUSTRIAL AVERAGE MSCI USA INDEX
------------- ---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C> <C>
1979 12.07% 12.13% 6.53% 9.86%
1981 22.24 11.87 8.30 11.13
1983 30.59 21.34 25.72 20.62
1985 23.43 17.84 15.85 17.70
1987 21.44 11.92 16.00 10.54
1989 22.15 23.55 23.58 22.55
1991 11.27 12.22 11.00 13.01
1993 0.49 8.67 11.95 8.43
1995 21.47 17.84 19.69 18.26
1997 25.15 27.78 26.67 28.26
1998 thru 3/31
</TABLE>
* Source: Barron's, Fact Set, Bloomberg, Morgan Stanley Capital International
and The Wall Street Journal. The Sponsor has not independently verified this
data but has no reason to believe that this data is incorrect in any material
respect.
- --------------------------------------------------------------------------------
(1)The Strategy Stocks for each period were identified by ranking the dividend
yield for each of the stocks in the Strategic Picks Subset by annualizing the
last dividend paid (the last dividend declared was used in cases when the
stock was trading ex-dividend as of the last day of the period) and dividing
the result by the stock's market value on the first day of trading on the New
York Stock Exchange in the period. Total Return for each period was
calculated by taking the difference between period-end prices and prices at
the end of the following period (adjusted for any stock splits and corporate
spinoffs) and adding dividends for the period. If the dividend yield for two
companies was the same in any period, the company with the largest market
capitalization was utilized. Historical total returns thus represent actual
stocks and real time; the results illustrate what an investor would have
obtained had the investor been invested in the related stocks in the periods
indicated. Total Return does not take into consideration any sales charges,
commissions, expenses or taxes that will be incurred by the Strategic Picks
Trust or Unitholders. Based on the hypothetical total returns set forth in
the table above, the average annual total returns for the Strategy Stocks for
the most recent three,
five, ten and twenty calendar year periods were 28.12%, 17.94%, 15.74% and
18.73%, respectively. Based on the hypothetical total returns set forth in the
table above, the average annual total returns for the S&P 500 for the most
recent three, five, ten and twenty calendar year periods were 30.82%, 20.04%,
17.80% and 16.37%, respectively. Based on the hypothetical returns set forth in
the table above, the average annual total returns for the DJIA for the most
recent three, five, ten and twenty calendar year periods were 29.86%, 21.82%,
18.41% and 16.33%, respectively. Based on the hypothetical returns set forth in
the table above, the average annual total returns for the MSCI USA Index for the
most recent three, five, ten and twenty calendar year periods were 31.12%,
20.37%, 17.90% and 15.87%, respectively.
The hypothetical returns shown above represent past performance and are not
guarantees of future performance and should not be used as a predictor of
returns to be expected in connection with the Strategic Picks Trust. Among other
factors, both stock prices (which may appreciate or depreciate) and dividends
(which may be increased, reduced or eliminated) will affect the returns. Had the
portfolio been available over the periods indicated in the above table, after
deductions for expenses and sales charges and not accounting for taxes, it would
have underperformed the S&P 500, the DJIA and the MSCI USA Index in 5, 3 and 4
of the last 10 two-year periods, respectively. There can be no assurance that
the Strategic Picks Trust will outperform the S&P 500, the Dow Jones Industrial
Average or the MSCI USA Index over the life of such Trust or over consecutive
rollover periods, if available. A Unitholder would not necessarily realize as
high a total return on an investment in the stocks upon which the hypothetical
returns shown above are based for the following reasons: the hypothetical total
return figures shown above do not reflect sales charges, commissions, Trust
expenses or taxes; the Trusts are established at different times of the year;
the Trust may not be able to invest equally in the Strategy Stocks and may not
be fully invested at all times; and Equity Securities are often purchased or
sold at prices different from the closing prices used in buying and selling
Units.
The chart below represents past performance of the Strategy Stocks, S&P 500,
the Dow Jones Industrial Average and the MSCI USA Index (but does not represent
possible performance of the Strategic Picks Trust which, as indicated above,
includes certain expenses and commissions not included in the chart) and should
not be considered indicative of future results. Further, results are
hypothetical. The chart assumes that all dividends during a period (including
those on stocks trading ex-dividend as of the last day of the period) are
reinvested at the end of that period and does not reflect sales charges,
commissions, expenses or income taxes. Based on the foregoing assumptions, the
average annual returns (which represent the percentage return derived by taking
the sum of the initial investment and all appreciation and dividends for the
specified investment period) during the period ended December 31, 1997 were
18.73%, 16.37%, 16.33% and 15.87% for the Strategy Stocks, the S&P 500, the Dow
Jones Industrial Average and the MSCI USA Index, respectively. There can be no
assurance that the Strategic Picks Trust will outperform the S&P 500, the Dow
Jones Industrial Average or the MSCI USA Index over its life or over consecutive
rollover periods, if available.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTED JANUARY 1, 1978
--------------------------------------------------------------------------------------------------------
TWO YEAR STANDARD & DOW JONES MSCI
PERIOD ENDED STRATEGY POOR'S 500 INDUSTRIAL USA
DECEMBER 31 STOCKS INDEX AVERAGE INDEX
------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C>
1979 $ 12,561 $ 12,574 $ 11,349 $ 12,069
1981 18,769 15,737 13,311 14,904
1983 32,008 23,169 21,038 21,684
1985 48,765 32,176 28,236 30,038
1987 71,920 40,304 37,995 36,700
1989 107,317 61,523 58,025 55,118
1991 132,880 77,477 71,493 70,391
1993 134,185 91,490 89,596 82,761
1995 197,995 127,048 128,342 115,740
1997 310,128 207,453 205,915 190,393
1998 thru 3/31
</TABLE>
EAFE STRATEGIC 20 TRUST
- --------------------------------------------------------------------------------
The EAFE Strategic 20 Trust consists of common stocks of the twenty companies
in the EAFE Subset which had the highest dividend yield as of the close of
business three business days prior to the Initial Date of Deposit. The portfolio
of the Trust is selected by implementing the following investment strategy.
Beginning with the MSCI EAFESM 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, which then comprise the "EAFE Subset",
are ranked by dividend yield and the twenty highest-dividend yielding stocks are
selected for the Trust portfolio. The Trust consists of common stocks of the
following companies:
The following table sets forth a comparison of the hypothetical total return
of the twenty highest yielding common stocks selected in accordance with the
investment strategy utilized by the EAFE Strategic 20 Trust (the "Strategy
Stocks") on an annual basis with the one-year total returns of all common stocks
comprising the MSCI EAFESM Index and the Standard & Poor's 500 Index in each of
the last 25 years, as of December 31 in each of those years (and as of the end
of the most recent quarter). It should be noted that the common stocks
comprising the Strategy Stocks may not be the same stocks from year to year and
may not be the same common stocks as those included in the EAFE Strategic 20
Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS(1)*
STANDARD & POOR'S
YEAR STRATEGY STOCKS MSCI EAFESM INDEX 500 INDEX
-------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
1973 (9.61)% (14.17)% (14.51)%
1974 (32.50) (22.14) (26.01)
1975 107.00 37.10 36.93
1976 (1.32) 3.74 23.54
1977 75.19 19.42 (7.16)
1978 16.81 34.30 6.39
1979 21.60 6.18 18.19
1980 13.87 24.43 31.52
1981 1.34 (1.03) (4.84)
1982 (5.77) (0.86) 20.37
1983 40.31 24.61 22.31
1984 27.22 7.86 5.97
1985 61.13 56.72 31.05
1986 44.21 69.94 18.54
1987 35.66 24.93 5.67
1988 33.63 28.59 16.34
1989 5.91 10.80 31.21
1990 (7.04) (23.20) (3.13)
1991 30.71 12.50 30.00
1992 (3.40) (11.85) 7.43
1993 75.05 32.94 9.92
1994 1.25 8.06 1.28
1995 26.12 11.55 37.11
1996 21.39 6.36 22.68
1997 26.79 2.06 33.10
1998 thru 3/31 6.43 14.30 13.95
</TABLE>
* Source: Barron's, Bloomberg L.P., Morgan Stanley Capital International and
Ibotson Associates. The Sponsor has not independently verified this data but has
no reason to believe that this data is incorrect in any material respect.
Reasonable assumptions were relied on where data was either unavailable or only
partially available and these assumptions could have a material impact on the
historical performance calculations.
- --------------------------------------------------------------------------------
(1)The Strategy Stocks for each period were identified by ranking the dividend
yield for each of the stocks in the MSCI EAFESM Index by annualizing the last
dividend paid or by adding together the last interim and final dividends paid
(the last dividend declared was used in cases when the stock was trading
ex-dividend as of the last day of the period) and dividing the result by the
stock's market value on the first day of trading in the period. Total Return
for each period was calculated by taking the difference between period-end
prices and prices at the end of the following period (adjusted for any stock
splits and corporate spinoffs) and adding dividends for the period.
Historical total returns thus represent actual stocks and real time; the
results illustrate what an investor would have obtained had the investor been
invested in the related stocks in the periods indicated. Total Return does
not take into consideration any sales charges, commissions, expenses or taxes
that will be incurred by a Trust.
Based on the total returns set forth in the table above, the average annual
total returns for the Strategy Stocks for the most recent complete three, five,
ten, twenty and twenty-five year periods were 24.74%, 28.03%, 19.04%, 21.56% and
19.48%, respectively. On the other hand, based on the total returns set forth in
the table above, the average annual total returns for the MSCI EAFESM Index for
the most recent complete three, five, ten, twenty and twenty-five year periods
were 6.59%, 11.71%, 6.56%, 14.38% and 11.92%, respectively. Based on the total
returns set forth in the table above, the average annual total returns for the
S&P 500 Index for the most recent three, five, ten, twenty and twenty-five year
periods were 30.82%, 20.04%, 17.80%, 16.37% and 12.87%, respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the EAFE Strategic 20 Trust. Among other factors,
both stock prices (which may appreciate or depreciate) and dividends (which may
be increased, reduced or eliminated) will affect the returns. Had the portfolio
been available over the periods indicated in the above table, after deductions
for expenses and sales charges and not accounting for taxes, they would have
underperformed the MSCI EAFESM Index and the S&P 500 Index in 9 and 13 of the
last 25 calendar years, respectively, and there can be no assurance that the
Trust will outperform the MSCI EAFESM Index and the S&P 500 Index over the life
of such Trust or over consecutive rollover periods, if available. A Unitholder
in the Trust would not necessarily realize as high a total return on an
investment in the stocks upon which the hypothetical returns shown above are
based for the following reasons: the total return figures shown above do not
reflect sales charges, commissions, Trust expenses or taxes; the Trusts are
established at different times of the year; the Trust may not be able to invest
equally in the Strategy Stocks and may not be fully invested at all times;
Equity 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.
The chart below represents past performance of the MSCI EAFESM Index, the S&P
500 Index and the Strategy Stocks (but does not represent possible performance
of the EAFE Strategic 20 Trust which, as indicated above, includes certain
expenses and commissions not included in the chart) and should not be considered
indicative of future results. Further, results are hypothetical. The chart
assumes that all dividends during a year (including those on stocks trading
ex-dividend as of the last day of the year) are reinvested at the end of that
year and does not reflect sales charges, commissions, expenses or income taxes.
Based on the foregoing assumptions, the average annual returns (which represent
the percentage return derived by taking the sum of the initial investment and
all appreciation and dividends for the specified investment period) during the
25 year period ended December 31, 1997, referred to in the table were 19.48%,
11.92% and 12.87 for the Strategy Stocks, the MSCI EAFESM Index and the S&P 500
Index, respectively. There can be no assurance that the Strategic 20 Trust will
outperform the MSCI EAFESM Index and the S&P 500 Index over its life or over
consecutive rollover periods, if available.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTED JANUARY 1, 1973
----------------------------------------------------------------------
MSCI EAFESM STANDARD & POOR'S
PERIOD STRATEGY STOCKS INDEX 500 INDEX
------------------ ---------------------- ---------------------- -------------------------
<S> <C> <C> <C> <C>
1973 $ 13,833 $ 8,583 $ 8,549
1974 12,504 6,683 6,325
1975 8,440 9,162 8,661
1976 17,471 9,505 10,700
1977 17,240 11,350 9,934
1978 20,138 15,244 10,569
1979 24,488 16,186 12,491
1980 27,885 20,140 16,429
1981 28,258 19,932 15,634
1982 26,628 19,761 18,818
1983 37,361 24,624 23,016
1984 47,531 26,560 24,391
1985 76,587 41,624 31,964
1986 110,446 70,737 37,890
1987 149,831 88,371 40,038
1988 200,219 113,637 46,580
1989 212,052 125,909 61,118
1990 197,123 96,698 59,205
1991 257,669 108,786 76,967
1992 248,899 95,895 82,685
1993 435,698 127,482 90,888
1994 441,144 137,757 92,051
1995 556,371 153,668 126,211
1996 675,379 163,441 154,836
1997 856,313 166,808 206,087
1998 thru 3/31
</TABLE>
The following table sets forth a comparison of the hypothetical average
annual total return of the twenty highest yielding common stocks selected in
accordance with the investment strategy utilized by the EAFE Strategic 20 Trust
(the "Strategy Stocks") on a biennial basis with the two-year average annual
total returns of all common stocks comprising the MSCI EAFESM Index and the
Standard & Poor's 500 Index in the last 25 years. It should be noted that the
common stocks comprising the Strategy Stocks may not be the same stocks from
year to year and may not be the same common stocks as those included in the EAFE
Strategic 20 Trust.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS(1)*
TWO YEAR PERIOD
ENDED STANDARD & POOR'S
DECEMBER 31 STRATEGY STOCKS MSCI EAFESM INDEX 500 INDEX
-------------------- ---------------------- ---------------------- ------------------------
<S> <C> <C> <C>
1974 % %
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998 thru 3/31
</TABLE>
* Source: Barron's, Bloomberg L.P., Dow Jones Corporation and Ibotson
Associates. The Sponsor has not independently verified this data but has no
reason to believe that this data is incorrect in any material respect.
Reasonable assumptions were relied on where data was either unavailable or only
partially available and these assumptions could have a material impact on the
historical performance calculations.
- --------------------------------------------------------------------------------
(1)The Strategy Stocks for each period were identified by ranking the dividend
yield for each of the stocks in the MSCI EAFESM Index by annualizing the last
dividend paid or by adding together the last interim and final dividends paid
(the last dividend declared was used in cases when the stock was trading
ex-dividend as of the last day of the period) and dividing the result by the
stock's market value on the first day of trading in the period. Total Return
for each period was calculated by taking the difference between period-end
prices and prices at the end of the following period (adjusted for any stock
splits and corporate spinoffs) and adding dividends for the period.
Historical total returns thus represent actual stocks and real time; the
results illustrate what an investor would have obtained had the investor been
invested in the related stocks in the periods indicated. Total Return does
not take into consideration any sales charges, commissions, expenses or taxes
that will be incurred by a Trust.
Based on the total returns set forth in the table above, the average annual
total returns for the Strategy stocks for the most recent complete three, five,
ten, twenty and twenty-five year periods were __.__%, __.__%, __.__%, __.__% and
__.__%, respectively. On the other hand, based on the total returns set forth in
the table above, the average annual total returns for the MSCI EAFESM for the
most recent complete three, five, ten, twenty and twenty-five year periods were
__.__%, __.__%, __.__%, __.__% and __.__%, respectively. Based on the total
returns set forth in the table above, the average annual total returns for the
S&P 500 Index for the most recent three, five, ten, twenty and twenty-five years
periods were 30.82%, 20.04%, 17.80%, 16.37% and ___% respectively.
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Trust. Among other factors, both stock prices
(which may appreciate or depreciate) and dividends (which may be increased,
reduced or eliminated) will affect the returns. A Unitholder in the Trust would
not necessarily realize as high a total return on an investment in the stocks
upon which the hypothetical returns shown above are based for the following
reasons: the total return figures shown above do not reflect sales charges,
commissions, Trust expenses or taxes; the Trusts are established at different
times of the year; the Trust may not be able to invest equally in the Strategy
Stocks and may not be fully invested at all times; Equity 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.
The chart below represents past performance of the MSCI EAFESM Index and the
Strategy Stocks (but does not represent possible performance of the EAFE
Strategic 20 Trust which, as indicated above, includes certain expenses and
commissions not included in the chart) and should not be considered indicative
of future results. Further, results are hypothetical. The chart assumes that all
dividends during a period (including those on stocks trading ex-dividend as of
the last day of the period) are reinvested at the end of that period and does
not reflect sales charges, commissions, expenses or income taxes. Based on the
foregoing assumptions, the average annual returns (which represent the
percentage return derived by taking the sum of the initial investment and all
appreciation and dividends for the specified investment period) during the 25
year period ended December 31, 1997 referred to in the table were __.__%, __%
and __.__% for the Strategy stocks, the MSCI EAFESM Index and the S&P 500 Index,
respectively. There can be no assurance that the EAFE Trust will outperform the
MSCI EAFESM Index or the S&P 500 Index over its life or over consecutive
rollover periods, if available.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTED JANUARY 1, 1973
----------------------------------------------------------------------
TWO YEAR
PERIOD ENDED STANDARD & POOR'S
DECEMBER 31 STRATEGY STOCKS MSCI EAFESM INDEX 500 INDEX
------------------ ---------------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
1974 $ $
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998 thru 3/31
</TABLE>
RISK FACTORS
- --------------------------------------------------------------------------------
GENERAL. An investment in Units of a Trust should be made with an
understanding of the risks which an investment in common stocks entails,
including the risk that the financial condition of the issuers of the Equity
Securities or the general condition of the common stock market may worsen and
the value of the Equity Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock market
movements and to volatile increases and decreases of value as market confidence
in and perceptions of the issuers change. These perceptions are based on
unpredictable factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
Shareholders of common stocks have rights to receive payments from the issuers
of those common stocks that are generally subordinate to those of creditors of,
or holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by the Trusts have a right to
receive dividends only when and if, and in the amounts, declared by each
issuer's board of directors and have a right to participate in amounts available
for distribution by such issuer only after all other claims on such issuer have
been paid or provided for. Common stocks do not represent an obligation of the
issuer and, therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims for
payment of principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its common
stock or the rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. The value of common stocks is subject to
market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Equity Securities in a portfolio may be expected to
fluctuate over the life of a Trust to values higher or lower than those
prevailing on the Initial Date of Deposit.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison with
the rights of creditors of, or holders of debt obligations or preferred stocks
issued by, the issuer. Cumulative preferred stock dividends must be paid before
common stock dividends and any cumulative preferred stock dividend omitted is
added to future dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on liquidation
which are senior to those of common stockholders.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Equity Securities may depend on whether dealers will make a market in
the Equity Securities. There can be no assurance that a market will be made for
any of the Equity Securities, that any market for the Equity Securities will be
maintained or of the liquidity of the Equity Securities in any markets made. In
addition, the Trusts may be restricted under the Investment Company Act of 1940
from selling Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemption, and the value of a Trust, will be
adversely affected if trading markets for the Equity Securities are limited or
absent.
An investment in Units of a Trust will terminate approximately thirteen
months (fourteen months for Global Trusts) from the Initial Date of Deposit
unless a Unitholder elects in writing to remain invested in the Trust through
the Mandatory Termination Date. If a Unitholder makes no election at the first
Special Redemption Date, the Unitholder's Units will be redeemed on such date
and the Unitholder will receive cash representing their pro rata portion of the
Trust's assets. Unitholders who sell or redeem their Units prior to holding such
Units for more than 18 months will not benefit from the reduced federal
long-term capital gains tax rate of 20%. For example, Unitholders who elect to
become Rollover Unitholders on or prior to the first Special Redemption Date
will not benefit from this reduced tax rate. Of course, there can be no
assurance that Unitholders will realize capital gains upon the disposition of
Units or Securities. Unitholders who elect to hold Units after the first Special
Redemption Date should note that this redemption process could cause the value
of the Trust to fall below the Minimum Termination Value stated under "Summary
of Essential Financial Information" and could result in a termination of the
Trust before the Mandatory Termination Date. This could cause a Unitholder who
elects to hold Units after the first Special Redemption Date to receive a
distribution of Unit proceeds prior to holding such Units for more than 18
months notwithstanding such election.
The Trust Agreement authorizes the Sponsor to increase the size of each Trust
and the number of Units thereof by the deposit of additional Securities, or cash
(including a letter of credit) with instructions to purchase additional
Securities, in the Trust and the issuance of a corresponding number of
additional Units. If the Sponsor deposits cash, existing and new investors may
experience a dilution of their investments and a reduction in their anticipated
income because of fluctuations in the prices of the Securities between the time
of the cash deposit and the purchase of the Securities and because each Trust
will pay the associated brokerage fees.
As described under "Fund Operating Expenses," all of the expenses of the
Trusts will be paid from the sale of the Securities in such Trust. It is
expected that such sales will be made at the end of the initial offering period
and each month thereafter through termination of the Trust. Such sales will
result in capital gains or losses (both of which will generally be characterized
for U.S. federal income tax purposes as short term capital gains or losses) and
may be made at times and prices which adversely affect the Trust. For a
discussion of the tax consequences of such sales, see "Taxation."
Unitholders will be unable to dispose of any of the Equity Securities in a
Trust, as such, and will not be able to vote the Equity Securities. As the
holder of the Equity Securities, the Trustee will have the right to vote all of
the voting stocks in each Trust and will vote such stocks in accordance with the
instructions of the Sponsor. In the absence of any such instructions by the
Sponsor, the Trustee will vote such stocks so as to insure that the stocks are
voted as closely as possible in the same manner and the same general proportion
as are stocks held by owners other than the Trust.
Like other investment companies, financial and business organizations and
individuals around the world, the Trusts could be adversely affected if the
computer systems used by the Sponsor, Evaluator, Supervisor or Trustee or other
service providers to the Trusts do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Sponsor, Evaluator, Supervisor
and Trustee are taking steps that they believe are reasonably designed to
address the Year 2000 Problem with respect to computer systems that they use and
to obtain reasonable assurances that comparable steps are being taken by the
Trusts' other service providers. At this time, however, there can be no
assurance that these steps will be sufficient to avoid any adverse impact to the
Trusts.
The Year 2000 Problem is expected to impact corporations, which may include
issuers of Equity Securities contained in the Trusts, to varying degrees based
upon various factors, including, but not limited to, their industry sector and
degree of technological sophistication. The Sponsor is unable to predict what
impact, if any, the Year 2000 Problem will have on issuers of the Equity
Securities contained in the Trusts.
FOREIGN SECURITIES. Since certain Equity Securities included in the Global
Trusts consist of securities of foreign issuers, an investment in these Trusts
involves certain investment risks that are different in some respects from an
investment in the United States Trusts which invests entirely in the securities
of domestic issuers. These investment risks include future political or
governmental restrictions which might adversely affect the payment or receipt of
payment of dividends on the relevant Equity Securities, the possibility that the
financial condition of the issuers of the Equity Securities may become impaired
or that the general condition of the relevant stock market may worsen (both of
which would contribute directly to a decrease in the value of the Equity
Securities and thus in the value of the Units), the limited liquidity and
relatively small market capitalization of the relevant securities market,
expropriation or confiscatory taxation, economic uncertainties and foreign
currency devaluations and fluctuations. In addition, for foreign issuers that
are not subject to the reporting requirements of the Securities Exchange Act of
1934, there may be less publicly available information than is available from a
domestic issuer. Also, foreign issuers are not necessarily subject to uniform
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic issuers. The securities
of many foreign issuers are less liquid and their prices more volatile than
securities of comparable domestic issuers. In addition, fixed brokerage
commissions and other transaction costs on foreign securities exchanges are
generally higher than in the United States and there is generally less
government supervision and regulation of exchanges, brokers and issuers in
foreign countries than there is in the United States. However, due to the nature
of the issuers of the Equity Securities selected for the Global Trusts, the
Sponsor believes that adequate information will be available to allow the
Supervisor to provide portfolio surveillance for each Trust.
Equity securities issued by non-U.S. issuers generally pay dividends in
foreign currencies and are principally traded in foreign currencies. Therefore,
there is a risk that the United States dollar value of these securities will
vary with fluctuations in the U.S. dollar foreign exchange rates for the various
Equity Securities. See "Exchange Rate" below.
On the basis of the best information available to the Sponsor at the present
time, none of the Equity Securities in the Global Trusts are subject to exchange
control restrictions under existing law which would materially interfere with
payment to the Trusts of dividends due on, or proceeds from the sale of, the
Equity Securities. However, there can be no assurance that exchange control
regulations might not be adopted in the future which might adversely affect
payment to either Trust. In addition, the adoption of exchange control
regulations and other legal restrictions could have an adverse impact on the
marketability of international securities in the Global Trusts and on the
ability of such Trusts to satisfy their obligation to redeem Units tendered to
the Trustee for redemption.
Investors should be aware that it may not be possible to buy all Equity
Securities at the same time because of the unavailability of any Equity
Security, and restrictions applicable to the Trusts relating to the purchase of
an Equity Security by reason of the federal securities laws or otherwise.
Foreign securities generally have not been registered under the Securities
Act of 1933 and may not be exempt from the registration requirements of such
Act. Sales of non-exempt Equity Securities by a Trust in the United States
securities markets are subject to severe restrictions and may not be
practicable. Accordingly, sales of these Equity Securities by a Trust will
generally be effected only in foreign securities markets. Although the Sponsor
does not believe that a Trust will encounter obstacles in disposing of the
Equity Securities, investors should realize that the Equity Securities may be
traded in foreign countries where the securities markets are not as developed or
efficient and may not be as liquid as those in the United States. The value of
the Equity Securities will be adversely affected if trading markets for the
Equity Securities are limited or absent.
GLOBAL TRUST INFORMATION. The information provided below details certain
important factors which impact the economies of both the United Kingdom and Hong
Kong. This information has been extracted from various governmental and private
publications, but no representation can be made as to its accuracy; furthermore,
no representation is made that any correlation exists between the economies of
the United Kingdom and Hong Kong and the value of the Equity Securities held by
the Global Trusts.
United Kingdom. The emphasis of United Kingdom's economy is in the private
services sector, which includes the wholesale and retail sector, banking,
finance, insurance, and tourism. Services as a whole account for a majority of
the United Kingdom's gross national product and makes a significant contribution
to the country's balance of payments. The United Kingdom experienced a recovery
of output in 1993-1994 accompanied by falling rates of inflation despite
expectations to the contrary. Quarterly changes in real gross domestic product
("GDP") in the United Kingdom grew moderately during 1994 and 1995 with an
approximate .5% increase in the last quarter of 1995 over the previous quarter.
The average quarterly rate of GDP growth in the United Kingdom (as well as in
Europe generally) has been decelerating since 1994.
The United Kingdom is a member of the European Union (the "EU"), formerly
known as the European Economic Community (the "EEC"). The EU was created through
the formation of the Maastricht Treaty on European Union in late 1993. It is
expected that the Treaty will have the effect of eliminating most remaining
trade barriers between the fifteen member nations and make Europe one of the
largest common markets in the world. The EU has the potential to become a
powerful trade bloc with a population of over 350 million people and an annual
gross national product of more than $4 trillion. However, the effective
implementation of the Treaty provisions and the rate at which trade barriers are
eliminated is uncertain at this time. Furthermore, the rapid political and
social change throughout Europe make the extent and nature of future economic
development in the United Kingdom and Europe and the impact of such development
upon the value of the Equity Securities in a Trust impossible to predict.
Volatility in oil prices could slow economic development throughout Western
Europe. Moreover, it is not possible to accurately predict the effect of the
current political and economic situation upon long-term inflation and balance of
trade cycles and how these changes would affect the currency exchange rate
between the U.S. dollar and the British pound sterling.
Hong Kong. Hong Kong, established as a British colony in the 1840's, reverted
to Chinese sovereignty effective July 1, 1997. On such date, Hong Kong became a
Special Administrative Region ("SAR") of China. Hong Kong's new constitution is
the Basic Law (promulgated by China in 1990). Prior to July 1, 1997, Hong Kong
government generally followed a laissez-faire policy toward industry. There were
no major import, export or foreign exchange restrictions. Regulation of business
was generally minimal with certain exceptions, including regulated entry into
certain sectors of the economy and a fixed exchange rate regime by which the
Hong Kong dollar has been pegged to the U.S. dollar. Over the ten year period
between 1983 and 1993, real gross domestic product increased at an average
annual rate of approximately 6%.
Although China has committed by treaty to preserve for 50 years the economic
and social freedoms enjoyed in Hong Kong prior to the reversion, the
continuation of the economic system in Hong Kong after the reversion will be
dependent on the Chinese government and there can be no assurances that the
commitment made by China regarding Hong Kong will be maintained. Prior to the
reversion, legislation was enacted in Hong Kong designed to extend democratic
voting procedures for Hong Kong's legislature. China expressed disagreement with
this legislation which it stated was in contravention of the principles
evidenced in the Basic Law of the Hong Kong SAR. The National People's Congress
of China has passed a resolution to the effect that the Legislative Council and
certain other councils and boards of the Hong Kong Government were to be
terminated on June 30, 1997. Such bodies have subsequently been reconstituted in
accordance with China's interpretation of the Basic Law. Any increase in
uncertainty as to the future economic and political status of Hong Kong could
have a materially adverse effect on the value of a Trust. The Sponsor is unable
to predict the level of market liquidity or volatility which may occur as a
result of the reversion to sovereignty, both of which may negatively impact a
Trust and the value of the Units.
China currently enjoys most favored nation status from the United States,
which is subject to annual review by the President of the United States and
Congress. As a result of Hong Kong's reversion to Chinese control, U.S.
lawmakers have suggested that they may review China's most favored nation status
on a more frequent basis. Revocation of most favored nation status would have a
severe effect on China's trade and thus could have a materially adverse effect
on the value of a Trust.
The performance of certain companies listed on the Hong Kong Stock Exchange
is linked to the economic climate of China. For example, between 1985 and 1990,
Hong Kong businesses invested $20 billion in the nearby Chinese province of
Guangdong to take advantage of the lower property and labor costs than were
available in Hong Kong. Recently, however, high economic growth in this area
(industrial production grew at an annual rate of about 20% in 1991, 24% in 1992
and 36.5% in 1993) has been associated with rising inflation and concerns about
the devaluation of the Chinese currency. The currency crisis which has affected
a majority of Asian markets since mid-1997 has forced Hong Kong leaders to
address whether to devalue the Hong Kong dollar or maintain its peg to the U.S.
dollar. Any downturn in economic growth or increase in the rate of inflation in
China or Hong Kong could have a materially adverse effect on the value of a
Trust.
Securities prices on the Hong Kong Exchange and, specifically the Hang Seng
Index, can be highly volatile and are sensitive to developments in Hong Kong and
China, as well as other world markets. For example, the Hang Seng Index declined
by approximately 36% in October, 1997, as a result of speculation that the Hong
Kong dollar would become the next victim of the Asian currency crisis, and in
1989, the Hang Seng Index dropped 1,216 points (approximately 58%) in early June
following the events at Tiananmen Square. The Hang Seng Index gradually climbed
in subsequent months but fell by 181 points on October 13, 1989 (approximately
6.5%) following a substantial fall in the U.S. stock markets. During 1994, the
Hang Seng Index lost approximately 31% of its value. The Hang Seng Index is
subject to change, and delisting of any issues or removal of issuers from the
Hang Seng Index may have an adverse impact on the performance of a Trust,
although delisting or removal would not necessarily result in the disposal of
the stock of these companies, nor would it prevent a Trust from purchasing
additional Equity Securities. In recent years, a number of companies have
delisted from the Hong Kong Stock Exchange, including Jardine Matheson Holdings
Ltd. and Jardine Strategic Holdings Ltd. in 1994 and three other Jardine
affiliates in 1995. These five companies represented almost 10% of the total
capitalization of the Hang Seng Index at that time. In addition, Shun Tak
Holdings Ltd. and South China Morning Post (Holdings) Ltd. were removed from the
Hang Seng Index and replaced by Shanghai Industrial Holdings Ltd. and China
Telecom (Hong Kong) Ltd. on January 27, 1998. As part of this change, HSI
Services Ltd. announced that because the Hong Kong Stock Exchange now lists more
Chinese and China-affiliated companies, stocks included in the Hang Seng Index
would no longer be required to have a substantial business presence in Hong
Kong. HSI Services also announced that a listing history on the Hong Kong Stock
Exchange of less than 24 months would not preclude a company from being included
in the Hang Seng Index (this has generally been a criteria for inclusion in the
past). Shanghai Industrial only became listed on the Exchange in May 1996 and
China Telecom listed in October 1997. In addition, on August 30, 1996, two
issuers, Hong Kong Aircraft Engineering Co. Ltd. and Miramar Hotel and
Investment, were removed from the Hang Seng Index. These issuers were replaced
by First Pacific Company Ltd. and Henderson Investments Ltd. No assurance can be
made that future changes in the composition of the Hang Seng Index will not
occur.
A Hong Kong, Strategic Thirty and Strategic Fifteen Trust may be considered
to be concentrated in common stocks of companies engaged in real estate asset
management, development, leasing, property sale and other related activities.
Investment in securities issued by these real estate companies should be made
with an understanding of the many factors which may have an adverse impact on
the equity securities or a particular company or industry. Generally, these
include economic recession, the cyclical nature of real estate markets,
competitive overbuilding, unusually adverse weather conditions, changing
demographics, changes in governmental regulations (including tax laws and
environmental, building, zoning and sales regulation), increases in real estate
taxes or costs of material and labor, the inability to secure performance
guarantees or insurance as required, the unavailability of investment capital
and the inability to obtain construction financing or mortgage loans at rates
acceptable to builders and purchases of real estate. With recent Chinese
economic development and reform, certain Hong Kong real estate companies and
other investors began purchasing and developing real estate in southern China.
By 1992, however, southern China began to experience a rise in real estate
prices and construction costs, a growing supply of real estate and a tightening
of credit markets. Any worsening of these conditions could affect the
profitability and financial condition of Hong Kong real estate companies and
could have a materially adverse effect on the value of a Hong Kong, Strategic
Thirty and Strategic Fifteen Trust.
EXCHANGE RATE. The Global Trusts are comprised of Equity Securities that are
principally traded in foreign currencies and as such involve investment risks
that are substantially different from an investment in a fund which invests in
securities that are principally traded in United States dollars. The United
States dollar value of a portfolio (and hence of the Units) and of the
distributions from the portfolio will vary with fluctuations in the United
States dollar foreign exchange rates for the relevant currencies. Most foreign
currencies have fluctuated widely in value against the United States dollar for
many reasons, including supply and demand of the respective currency, the rate
of inflation in the respective economies compared to the United States, the
impact of interest rate differentials between different currencies on the
movement of foreign currency rates, the balance of imports and exports of goods
and services, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and other
countries.
The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty, which established a system of fixed
exchange rates and the convertibility of the United States dollar into gold
through foreign central banks. Starting in 1971, growing volatility in the
foreign exchange markets caused the United States to abandon gold convertibility
and to effect a small devaluation of the United States dollar. In 1973, the
system of fixed exchange rates between a number of the most important industrial
countries of the world, among them the United States and most Western European
countries, was completely abandoned. Subsequently, major industrialized
countries have adopted "floating" exchange rates, under which daily currency
valuations depend on supply and demand in a freely fluctuating international
market. Many smaller or developing countries have continued to "peg" their
currencies to the United States dollar although there has been some interest in
recent years in "pegging" currencies to "baskets" of other currencies or to a
Special Drawing Right administered by the International Monetary Fund. Since
1983, the Hong Kong dollar has been pegged to the U.S. dollar. In Europe a
European Currency Unit ("ECU") has been developed. Currencies are generally
traded by leading international commercial banks and institutional investors
(including corporate treasurers, money managers, pension funds and insurance
companies). From time to time, central banks in a number of countries also are
major buyers and sellers of foreign currencies, mostly for the purpose of
preventing or reducing substantial exchange rate fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of actual and
proposed government policies on the value of currencies, interest rate
differentials between the currencies and the balance of imports and exports of
goods and services and transfers of income and capital from one country to
another. These economic factors are influenced primarily by a particular
country's monetary and fiscal policies (although the perceived political
situation in a particular country may have an influence as well--particularly
with respect to transfers of capital). Investor psychology may also be an
important determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative strength or
weakness of a particular currency may sometimes exercise considerable
speculative influence on currency exchange rates by purchasing or selling large
amounts of the same currency or currencies. However, over the long term, the
currency of a country with a low rate of inflation and a favorable balance of
trade should increase in value relative to the currency of a country with a high
rate of inflation and deficits in the balance of trade.
The following tables set forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and end of
month equivalent U.S. dollar rates of exchange for the United Kingdom pound
sterling and the Hong Kong dollar:
FOREIGN EXCHANGE RATES
RANGE OF FLUCTUATIONS IN
FOREIGN CURRENCIES
--------------------------------------------
UNITED KINGDOM
ANNUAL POUND STERLING/ HONG KONG/
PERIOD U.S. DOLLAR U.S. DOLLAR
----------- ---------------- ----------------
1983 0.616-0.707 6.480-8.700
1984 0.670-0.864 7.774-8.050
1985 0.672-0.951 7.729-7.990
1986 0.643-0.726 7.768-7.819
1987 0.530-0.680 7.751-7.822
1988 0.525-0.601 7.764-7.912
1989 0.548-0.661 7.775-7.817
1990 0.504-0.627 7.740-7.817
1991 0.499-0.624 7.716-7.803
1992 0.499-0.667 7.697-7.781
1993 0.630-0.705 7.722-7.766
1994 0.610-0.684 7.723-7.750
1995 0.610-0.653 7.726-7.763
1996 0.583-0.670 7.724-7.742
1997 0.633-0.584 7.751-7.708
Source: Bloomberg L.P.
<TABLE>
<CAPTION>
END OF MONTH EXCHANGE RATES END OF MONTH EXCHANGE RATES
FOR FOREIGN CURRENCIES FOR FOREIGN CURRENCIES (CONTINUED)
--------------------------------------------- ---------------------------------------------
UNITED UNITED
KINGDOM KINGDOM
POUND POUND
STERLING/ HONG KONG/ STERLING/ HONG KONG/
MONTHLY PERIOD U.S. DOLLAR U.S. DOLLAR MONTHLY PERIOD U.S. DOLLAR U.S. DOLLAR
-------------- --------------- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
1993 1995 (Cont.)
January .673 7.734 October .633 7.727
February .701 7.734 November .652 7.731
March .660 7.731 December .645 7.733
April .635 7.730 1996
May .640 7.724 January .661 7.728
June .671 7.743 February .653 7.731
July .674 7.761 March .655 7.734
August .670 7.755 April .664 7.735
September .668 7.734 May .645 7.736
October .676 7.733 June .644 7.741
November .673 7.725 July .642 7.735
December .677 7.723 August .640 7.733
1994 September .639 7.733
January .664 7.724 October .615 7.732
February .673 7.727 November .595 7.732
March .674 7.737 December .583 7.735
April .659 7.725 1997
May .662 7.726 January .624 7.750
June .648 7.730 February .614 7.744
July .648 7.725 March .611 7.749
August .652 7.728 April .616 7.746
September .634 7.727 May .610 7.748
October .611 7.724 June .600 7.747
November .639 7.731 July .609 7.742
December .639 7.738 August .619 7.751
1995 September .619 7.738
January .633 7.732 October .599 7.776
February .631 7.730 November .592 7.730
March .617 7.733 December .608 7.749
April .620 7.742 1998
May .630 7.735 January .613 7.735
June .627 7.736 February .609 7.743
July .626 7.738 March
August .645 7.741
September .631 7.732
Source: Bloomberg L.P.
</TABLE>
The Evaluator will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets. However,
since these markets are volatile and are constantly changing, depending on the
activity at any particular time of the large international commercial banks,
various central banks, large multi-national corporations, speculators and other
buyers and sellers of foreign currencies, and since actual foreign currency
transactions may not be instantly reported, the exchange rates estimated by the
Evaluator may not be indicative of the amount in United States dollars a Trust
would receive had the Trustee sold any particular currency in the market. The
foreign exchange transactions of a Trust will be concluded by the Trustee with
foreign exchange dealers acting as principals on a spot (i.e., cash) buying
basis. Although foreign exchange dealers trade on a net basis, they do realize a
profit based upon the difference between the price at which they are willing to
buy a particular currency (bid price) and the price at which they are willing to
sell the currency (offer price).
TAXATION
- --------------------------------------------------------------------------------
UNITED STATES 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.
The Sponsor has been advised by the Trustee that U.S. Unitholders may not be
able to obtain directly Treaty Payments (as described in "United Kingdom
Taxation" below) to which they are entitled under the U.K./U.S. Treaty but that
the U.K. Inland Revenue has approved a special procedure whereby the Trustee can
claim Treaty Payments on behalf of U.S. Unitholders of certain Trusts and
distribute those payments to Unitholders. To the extent the Trustee obtains
Treaty Payments, U.S. Unitholders will report as gross income earned their pro
rata portion of dividends received by such Trusts as well as the amount of the
associated tax credit. Because, under the grantor trust rules, an investor is
deemed to have paid directly his share of foreign tax credits 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.
Investors should consult their tax advisers with respect to foreign withholding
taxes and foreign tax credits.
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 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 of a Strategic Thirty or a Strategic Fifteen Trust will receive cash
representing his pro rata portion of the foreign Securities in such 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 such 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 of such a Trust
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. UNITED KINGDOM TAXATION
Tax Consequences of Ownership of Ordinary Shares. In the opinion of
Linklaters & Paines, United Kingdom special counsel to the Sponsor, based on the
terms of the United Kingdom, Strategic Thirty or Strategic Fifteen Trusts as
described in this Prospectus and on certain representations made by special U.S.
counsel to the Sponsor, the following summary accurately describes certain U.K.
tax consequences for certain U.S. Unitholders who beneficially hold Units of
such Trusts as capital assets. This summary is based upon current U.S. law, U.K.
taxation law and Inland Revenue practice in the U.K., the U.S./U.K. convention
relating to taxes on income and capital gains ("the Treaty"), and the U.S./U.K.
convention relating to estate and gift taxes (the "Estate Tax Treaty"). The
summary is a general guide only and is subject to any changes in U.K. or U.S.
law, or the practice relating thereto and in the Treaty or Estate Tax Treaty
occurring after the date of this Prospectus which may affect (including possibly
on a retroactive basis) the tax consequences described herein. Accordingly,
Unitholders should consult their own tax advisers as to the U.K. tax
consequences applicable to their particular circumstances of ownership of the
Units of the United Kingdom, Strategic Thirty or Strategic Fifteen Trusts.
Taxation of Dividends. Where a U.K. resident individual receives a dividend
from a U.K. company (other than a foreign income dividend (see below)), such
individual is generally entitled to a tax credit, which may be offset against
such individual's U.K. taxes, or, in certain circumstances, repaid. Under the
Treaty, a U.S. Unitholder, who is resident in the U.S. for the purposes of the
Treaty, may, in appropriate circumstances, be entitled to a repayment of that
tax credit, but any such repayment is subject to U.K. withholding tax at the
rate of 15% of the sum of the dividend and the credit. For dividends paid before
April 6, 1999, the tax credit, before such withholding, is equal to one quarter
of the dividend (the "Tax Credit Amount"). Although such a U.S. Unitholder who
held shares directly in a company resident in the U.K. for the purposes of the
Treaty could generally claim a refund of a portion of the Tax Credit Amount
attributable to the dividend (a "Treaty Payment") pursuant to the terms of the
Treaty, the ability of such a U.S. Unitholder of Units in the United Kingdom,
Strategic Thirty or Strategic Fifteen Trusts to claim such a Treaty Payment is
unclear where dividend payments are made directly to an entity such as the
United Kingdom, Strategic Thirty or Strategic Fifteen Trusts. Any claim for such
a Treaty Payment would have to be supported by evidence of such U.S.
Unitholder's entitlement to the relevant dividend. There is no established
procedure for proving such entitlement where the U.K. company pays the dividend
to a person such as the United Kingdom, Strategic Thirty or Strategic Fifteen
Trusts unless a specific procedure is negotiated in advance with the U.K. Inland
Revenue. In the absence of agreeing such a special procedure, Unitholders who
are U.S. Persons should note that they may not in practice be able to claim a
Treaty Payment from the U.K. Inland Revenue.
For dividends paid on or after April 6, 1999, the tax credit is to be reduced
to one ninth of the dividend. U.S. Unitholders should note that it will not
therefore be possible to claim a Treaty Payment in respect of dividends paid on
U.K. Securities by a U.K. company on or after April 6, 1999.
Certain U.K. companies which themselves receive income from other
jurisdictions which is subject to withholding of tax at source may elect to pay
some or all of their distributions as foreign income dividends. If a U.K.
company the shares of which are held in the United Kingdom, Strategic Thirty or
Strategic Fifteen Trusts pays a foreign income dividend, no tax credit will be
attributable to such dividend. Accordingly, a U.S. Unitholder would not be
entitled to any repayment of a tax credit under the Treaty in respect of such
dividends.
Taxation of Capital Gains. U.S. Unitholders who are neither resident nor
ordinarily resident for tax purposes in the U.K. will not be liable for U.K. tax
on capital gains realized on the disposal of their Units unless such Units are
used, held or acquired for the purposes of a trade, profession or vocation
carried on in the U.K. through a branch or agency or for the purposes of such
branch or agency.
U.K. Inheritance Tax. An individual Unitholder who is domiciled in the U.S.
for the purposes of the Estate Tax Treaty and who is not a national of the U.K.
for the purposes of the Estate Tax Treaty will generally not be subject to U.K.
inheritance tax in respect of Units in the United Kingdom, Strategic Thirty or
Strategic Fifteen Trusts on the individual's death or on a gift or other
non-arm's length transfer of such Units during the individual's lifetime
provided that any applicable U.S. federal gift or estate tax liability is paid,
unless the Units are part of the business property of a permanent establishment
of the individual in the U.K. or pertain to a fixed base in the U.K. used by an
individual for the performance of independent personal services. Where the Units
have been placed in trust by a settlor, the Units will generally not be subject
to U.K. inheritance tax if the settlor, at the time of settlement, was domiciled
in the U.S. for the purposes of the Estate Tax Treaty and was not a U.K.
national, provided that any applicable U.S. federal gift or estate tax liability
is paid. In the exceptional case where the Units are subject both to U.K.
inheritance tax and to U.S. federal gift or estate tax, the Estate Tax Treaty
generally provides for the tax payable in the U.K. to be credited against tax
paid in the U.S. or for tax paid in the U.S. to be credited against tax payable
in the U.K. based on priority rules set out in that Treaty.
Stamp Tax. In connection with a transfer of U.K. Securities in the United
Kingdom, Strategic Thirty or Strategic Fifteen Trusts, there is generally
imposed a U.K. stamp duty or stamp duty reserve tax payable upon transfer, which
tax is usually imposed on the purchaser of such Securities. Upon acquisition of
the U.K. Securities in the United Kingdom, Strategic Thirty or Strategic Fifteen
Trusts, the Trust paid such tax. It is anticipated that upon the sale of such
Securities such tax will be paid by the purchaser thereof and not by the United
Kingdom, Strategic Thirty or Strategic Fifteen Trusts.
HONG KONG TAXATION
The Sponsor has been advised that the following summary accurately describes
the Hong Kong tax consequences under existing law to U.S. Unitholders of Units
of the Hong Kong, Strategic Thirty or Strategic Fifteen Trusts. This discussion
is for general purposes only and assumes that such Unitholder is not carrying on
a trade, profession or business in Hong Kong and has no profits sourced in Hong
Kong arising from the carrying on of such trade, profession or business.
Unitholders should consult their tax advisers as to the Hong Kong tax
consequences of ownership of the Units of the Hong Kong, Strategic Thirty or
Strategic Fifteen Trusts applicable to their particular circumstances.
Taxation of Dividends. Amounts in respect of dividends paid to Unitholders of
the Hong Kong, Strategic Thirty or Strategic Fifteen Trusts are not taxable and
therefore will not be subject to the deduction of any withholding tax.
Profits Tax. A Unitholder of the Hong Kong, Strategic Thirty or Strategic
Fifteen Trusts (other than a person carrying on a trade, profession or business
in Hong Kong) will not be subject to profits tax on any gain or profits made on
the realization or other disposal of his Units.
Hong Kong Estate Duty. Units of the Hong Kong, Strategic Thirty or Strategic
Fifteen Trusts will not give rise to a liability to Hong Kong estate duty.
FUND OPERATING EXPENSES
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COMPENSATION OF SPONSOR AND EVALUATOR. The Sponsor will not receive any fees
in connection with its activities relating to the Fund. However, Van Kampen
American Capital Investment Advisory Corp., which is an affiliate of the
Sponsor, will receive an annual supervisory fee, which is not to exceed the
amount set forth under "Summary of Essential Financial Information", for
providing portfolio supervisory services for the Fund. Such fee (which is based
on the number of Units of each Trust outstanding on January 1 of each year
except during the initial offering period in which event the calculation is
based on the number of Units of each Trust outstanding at the end of the month
of such calculation) may exceed the actual costs of providing such supervisory
services for these Trusts, but at no time will the total amount received for
portfolio supervisory services rendered to all Series of the Fund and to any
other unit investment trusts sponsored by the Sponsor for which the Supervisor
provides portfolio supervisory services in any calendar year exceed the
aggregate cost to the Supervisor of supplying such services in such year. In
addition, American Portfolio Evaluation Services, which is a division of Van
Kampen American Capital Investment Advisory Corp., shall receive for regularly
providing evaluation services to the Fund the annual evaluation fee set forth
under "Summary of Essential Financial Information" (which is based on the number
of Units of each Trust outstanding on January 1 of each year for which such
compensation relates except during the initial offering period in which event
the calculation is based on the number of Units of each Trust outstanding at the
end of the month of such calculation) for regularly evaluating the Fund
portfolios. The foregoing fees are payable as described under " below. Both of
the foregoing fees may be increased without approval of the Unitholders by
amounts not exceeding proportionate increases under the category "All Services
Less Rent of Shelter" in the Consumer Price Index published by the United States
Department of Labor or, if such category is no longer published, in a comparable
category. The Sponsor will receive sales commissions and may realize other
profits (or losses) in connection with the sale of Units and the deposit of the
Securities as described under "Public Offering--Sponsor and Other Compensation".
TRUSTEE'S FEE. For its services the Trustee will receive the fee from each
Trust set forth under "Summary of Essential Financial Information" (which is
based on the number of Units of each Trust outstanding at the end of the month
of such calculation until the end of the initial offering period at which time
such calculation is based on the number of Units of each Trust outstanding on
such date) and in connection with the Global Trusts the additional amounts set
forth in footnote (8) in the "Summary of Essential Financial Information". The
Trustee's fees are payable as described under "General" below. The Trustee
benefits to the extent there are funds for future distributions, payment of
expenses and redemptions in the Capital and Income Accounts since these Accounts
are non-interest bearing to 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. Such fees may
be increased without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of Shelter"
in the Consumer Price Index published by the United States Department of Labor
or, if such category is no longer published, in a comparable category. For a
discussion of the services rendered by the Trustee pursuant to its obligations
under the Trust Agreement, see "Rights of Unitholders--Reports Provided" and
"Fund Administration".
MISCELLANEOUS EXPENSES. Expenses incurred in establishing each Trust,
including the cost of the initial preparation of documents relating to such
Trust (including the Prospectus, Trust Agreement and closing documents), federal
and state registration fees, the initial fees and expenses of the Trustee, legal
and accounting expenses, payment of closing fees and any other out-of-pocket
expenses, will be paid by such 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) accrual of costs associated with liquidating the
securities held in a Trust portfolio and (i) expenditures incurred in contacting
Unitholders upon termination of a Trust. The expenses set forth herein are
payable as described under "General" below.
GENERAL. During the initial offering period of each Trust, all of the fees
and expenses of such Trust will accrue on a daily basis and will be charged to
such Trust, in arrears, at the end of the initial offering period. After the
initial offering period, all of the fees and expenses of each Trust will accrue
on a daily basis and will be charged to such Trust, in arrears, on a monthly
basis on or before the tenth day of each month. The fees and expenses are
payable out of the Capital Account of the related Trust. When such fees and
expenses are paid by or owing to the Trustee, they are secured by a lien on the
related Trust's portfolio. It is expected that the balance in the Capital
Account of each Trust will be insufficient to provide for amounts payable by the
related Trust, and that Equity Securities will be sold from such Trust to pay
such amounts. These sales will result in capital gains or losses to Unitholders.
See "Taxation" and "Risk Factors".
PUBLIC OFFERING
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GENERAL. Units are offered at the Public Offering Price. During the initial
offering period and for secondary market transactions after the initial offering
period the Public Offering Price is based on the aggregate underlying value of
the Securities in each Trustportfolio, the initial sales charge described below,
and cash, if any, in the Income and Capital Accounts held or owned by such
Trust.
The initial sales charge for the Traditional Trusts is 2.75% of the Public
Offering Price. No deferred sales charge is imposed on Traditional Trust Units
during the first year of the Trust.
For the EAFE Strategic 20 Trust, the initial sales charge 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).
For all other Trusts, the initial sales charge is equal to the difference
between the total first year sales charge for a Trust (2.75% of the Public
Offering Price) and the deferred sales charge imposed prior to the first Special
Redemption Date ($0.175 per Unit).
The monthly deferred sales charge ($0.0175 per Unit ($0.195 per Unit for the
EAFE Strategic 20 Trust)) will begin accruing on a daily basis on July 14, 1998
and will continue to accrue through May 13, 1999; the monthly deferred sales
charge will be charged to each Trust, in arrears, commencing August 14, 1998 and
will be charged on the 14th day of each month thereafter through May 14, 1999.
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 of
$0.15 per Unit ($0.17 per Unit for the EAFE Strategic 20 Trust). This deferred
sales charge will be assessed on June 16, 1999 for the Traditional Trusts. For
all other Trusts this deferred sales charge will begin accruing on a daily basis
commencing July 12, 1999 and will continue to accrue through March 11, 2000;
this monthly deferred sales charge will be charged to each Trust, in arrears,
commencing August 12, 1999 and will be charged on the __th day of each month
thereafter through March 12, 2000.
If any deferred sales charge payment date is not a business day, the payment
will be charged to the Trusts on the next business day. Unitholders will be
assessed that portion of the deferred sales charge accrued from the time they
became Unitholders of record. Units purchased subsequent to the initial deferred
sales charge payment will be subject to only that portion of the deferred sales
charge payments not yet collected. The deferred sales charge will be paid from
funds in the Capital Account, if sufficient, or from the periodic sale of
Securities. For the EAFE Strategic 20 Trust, the total maximum sales charge
prior to the first Special Redemption Date will be 2.95% of the Public Offering
Price (3.040% of the aggregate value of the Securities less the deferred sales
charge). For all other Trusts, the total maximum sales charge prior to the first
Special Redemption Date on a per Unit basis will be 2.75% of the Public Offering
Price (2.828% of the aggregate value of the Securities less any deferred sales
charge). For the EAFE Strategic 20 Trust, the total maximum sales charge
assessed to each Unitholder who elects to hold Units through termination of the
Trust will be 4.65% of the Public Offering Price (4.877% of the aggregate value
of the Securities less the deferred sales charge). For all other Trusts, the
total sales charge assessed to each Unitholder who elects to hold Units through
termination of a Trust will be 4.25% of the Public Offering Price (4.439% of the
aggregate value of the Securities less any deferred sales charge). The sales
charge applicable to quantity purchases is reduced on a graduated basis as
follows:
AGGREGATE DOLLAR AMOUNT PERCENTAGE SALES CHARGE
OF UNITS PURCHASED* REDUCTION PER UNIT
------------------------ --------------------------------
$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 per 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.
The sales charge reduction will primarily be 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 (on the day preceding the
date of purchase) of each respective trust purchased to determine the total
number of units which such amount could have purchased of each individual trust.
Purchasers must then consult the applicable trust's prospectus to determine
whether the total number of units which could have been purchased of a specific
trust would have qualified for a reduced sales charge and, if so qualified, the
amount of such reduction. Assuming a purchaser qualified for a sales charge
reduction or reductions, to determine the applicable sales charge reduction or
reductions it is necessary to accumulate all purchases made on the Initial
Purchase Date and all purchases made in accordance with (b) above. Units
purchased in the name of the spouse of a purchaser or in the name of a child of
such purchaser ("immediate family members") will be deemed for the purposes of
calculating the applicable sales charge to be additional purchases by the
purchaser. The reduced sales charges will also be applicable to a trustee or
other fiduciary purchasing securities for one or more trust estate or fiduciary
accounts.
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 sale amount. If a purchaser
does not complete the required purchases under the Letter of Intent within the
13 month period, no such retroactive sales charge reduction shall be made. To
qualify under a Letter of Intent each purchase of units of Van Kampen Capital
unit investment trusts must equal or exceed $100,000.
Units may be purchased in the primary or secondary market at the Public
Offering Price (for purchases which do not qualify for a sales charge reduction
for quantity purchases) less the concession the Sponsor typically allows to
brokers and dealers for purchases (see "Public Offering--Unit Distribution") by
(1) investors who purchase Units through registered investment advisers,
certified financial planners and registered broker-dealers who in each case
either charge periodic fees for financial planning, investment advisory or asset
management service, or provide such services in connection with the
establishment of an investment account for which a comprehensive "wrap fee"
charge is imposed, (2) bank trust departments investing funds over which they
exercise exclusive discretionary investment authority and that are held in a
fiduciary, agency, custodial or similar capacity, (3) any person who for at
least 90 days, has been an officer, director or bona fide employee of any firm
offering Units for sale to investors or their immediate family members (as
described above) and (4) officers and directors of bank holding companies that
make Units available directly or through subsidiaries or bank affiliates.
Notwithstanding anything to the contrary in this Prospectus, such investors,
bank trust departments, firm employees and bank holding company officers and
directors who purchase Units through this program will not receive sales charge
reductions for quantity purchases.
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.
OFFERING PRICE. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in accordance
with fluctuations in the prices of the underlying Securities in the Trusts. In
the case of the Global Trusts, the Public Offering Price per Unit is based on
the aggregate value of the Securities computed on the basis of the offering side
or bid side value of the relevant currency exchange rate expressed in U.S.
dollars during the initial offering period or secondary market.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities in each Trust
an amount equal to the initial sales charge and dividing the sum so obtained by
the number of Units in each Trust outstanding. In addition, the Public Offering
Price shall include the proportionate share of any cash held in the Income and
Capital Accounts in each Trust. The initial price determination was made on the
basis of an evaluation of the Securities in the Trusts prepared by Interactive
Data Corporation, a firm regularly engaged in the business of evaluating,
quoting or appraising comparable securities. Thereafter, the Evaluator on each
business day will appraise or cause to be appraised the value of the underlying
Securities in the applicable Trust as of the relevant Evaluation Time and will
adjust the Public Offering Price of the Units commensurate with such valuation.
Such Public Offering Price will be effective for all orders received prior to
the Evaluation Time on each such day. Orders received by the Trustee or Sponsor
for purchases, sales or redemptions after that time, or on a day which is not a
business day for the related Trust, will be held until the next determination of
price. The term "business day", as used herein and under "Rights of
Unitholders--Redemption of Units", shall exclude Saturdays, Sundays and holidays
observed by the New York Stock Exchange, Inc. The term "business day" shall
exclude holidays observed by the London Stock Exchange for a United Kingdom
Trust and shall exclude holidays observed by the Stock Exchange of Hong Kong
Ltd. for a Hong Kong Trust. In connection with the EAFE Strategic 20, Strategic
Thirty and Strategic Fifteen Trusts, the term "business day" shall also exclude
any day on which Securities representing greater than 33% of the Securities in a
Trust are not traded on the principal trading exchange for such Securities due
to a customary business holiday on such exchange; accordingly, purchases or
redemptions of Units in such Trusts on such a day will be based on the next
determination of price of the Securities (and the price of such Units would be
the next computed Unit price). Unitholders of Traditional Trusts who purchase
Units after the Initial Date of Deposit will pay an initial sales charge of
2.75% of the Public Offering Price and will not be assessed a deferred sales
charge during the first year of a Trust. Unitholders of all other Trusts who
purchase Units subsequent to the Initial Date of Deposit will pay the initial
sales charge described above and will be assessed a deferred sales charge of
$0.0175 per Unit ($0.0195 per Unit for the EAFE Strategic 20 Trust) on each of
the remaining deferred sales charge payment dates as set forth in "Public
Offering--General". In addition, Unitholders of all Trusts who elect to hold
Units after the first Special Redemption Date will be assessed a deferred sales
charge of $0.15 per Unit ($0.17 per Unit for the EAFE Strategic 20 Trust) during
the Trust's second year as set forth in "Public Offering--General". The Sponsor
currently does not intend to maintain a secondary market after November 9, 1998.
The aggregate underlying value of the Equity Securities during the initial
offering period is determined on each business day by the Evaluator in the
following manner: If the Equity Securities are listed on a national 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 Equity Securities are not
listed on a national or foreign securities exchange or, if so listed and the
principal market therefore is other than on the exchange, the evaluation shall
generally be based on the current ask price on the over-the-counter market
(unless it is determined that these prices are inappropriate as a basis for
evaluation). If current ask prices are unavailable, the evaluation is generally
determined (a) on the basis of current ask prices for comparable securities, (b)
by appraising the value of the Equity Securities on the ask side of the market
or (c) by any combination of the above. In the case of the Global Trusts, the
value of the Equity Securities during the initial offering period is based on
the aggregate underlying value of the foreign Securities computed on the basis
of the offering side value of the relevant currency exchange rate expressed in
U.S. dollars as of the related Evaluation Time.
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities in the Trusts
but rather the entire pool of Securities, taken as a whole, which are
represented by the Units.
UNIT DISTRIBUTION. During the initial offering period, Units will be
distributed to the public by the Sponsor, broker-dealers and others at the
Public Offering Price. Upon the completion of the initial offering period, Units
repurchased in the secondary market, if any, may be offered by this Prospectus
at the secondary market Public Offering Price in the manner described above.
The Sponsor intends to qualify the Units for sale in a number of states.
Brokers, dealers and others will be allowed a concession or agency commission in
connection with the distribution of Units during the initial offering period as
set forth in the following table. A portion of such concessions or agency
commissions represents amounts paid by the Sponsor to such brokers, dealers and
others out of its own assets as additional compensation.
<TABLE>
<CAPTION>
AGGREGATE DOLLAR AMOUNT INITIAL OFFERING PERIOD CONCESSION
OF UNITS PURCHASED* OR AGENCY COMMISSION PER UNIT
--------------------------------- -----------------------------------------------
<S> <C> <C> <C>
$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
</TABLE>
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*The breakpoint concessions or agency commissions are also applied on
a per 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 set forth 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. Such 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 transactions involving Rollover
Unitholders the total concession or agency commission will amount to 1.1% per
Unit (or such lesser amount resulting from quantity sales discounts). For all
secondary 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.
Certain commercial banks are making Units of the Trusts available to their
customers on an agency basis. A portion of the sales charge (equal to the agency
commission referred to above) is retained by or remitted to the banks. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units; however,
the Glass-Steagall Act does permit certain agency transactions and the banking
regulators have not indicated that these particular agency transactions are not
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 100 Units (25 Units for qualified
retirement plans) but may vary by selling firm. In connection with fully
disclosed transactions with the Sponsor, the minimum purchase requirement will
be that number of Units set forth in the contract between the Sponsor and the
related broker or agent. The Sponsor reserves the right to reject, in whole or
in part, any order for the purchase of Units and to change the amount of the
concession or agency commission to dealers and others from time to time.
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.
SPONSOR AND OTHER COMPENSATION. The Sponsor will receive gross sales
commission equal to the total sales charge applicable to a transaction as
described under "General" above. Any discount provided to investors will be
borne by the selling dealer or agent.
In addition, the Sponsor will realize a profit or will sustain a loss, as the
case may be, as a result of the difference between the price paid for the
Securities by the Sponsor and the cost of such Securities to 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 in the Fund portfolios. The Sponsor may
further realize additional profit or loss during the initial offering period as
a result of the possible fluctuations in the market value of the Securities in
the Trusts after a date of deposit, since all proceeds received from purchasers
of Units.
Broker-dealers of the Trusts, banks and/or others may be eligible to
participate in a program in which such firms receive from the Sponsor a nominal
award for each of their representatives who have sold a minimum number of units
of unit investment trusts created by the Sponsor during a specified time period.
In addition, at various times the Sponsor may implement other programs under
which the sales forces of brokers, dealers, banks and/or others may be eligible
to win other nominal awards for certain sales efforts, or under which the
Sponsor will reallow to such brokers, dealers, banks and/or others that sponsor
sales contests or recognition programs conforming to criteria established by the
Sponsor, or participate in sales programs 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.
Cash, if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor currently intends to
maintain a secondary market for Units of the Trusts for the period indicated. In
so maintaining a market, the Sponsor will also realize profits or sustain losses
in the amount of any difference between the price at which Units are purchased
and the price at which Units are resold (which price includes the applicable
sales charge). In addition, the Sponsor will also realize profits or sustain
losses resulting from a redemption of such repurchased Units at a price above or
below the purchase price for such Units, respectively.
PUBLIC MARKET. Although it is not obligated to do so, the Sponsor currently
intends to maintain a market for the Units offered hereby through November 9,
1998 and offer continuously to purchase Units at prices, subject to change at
any time, based upon the aggregate underlying value of the Equity Securities in
the Trusts (computed as indicated under "Offering Price" above and "Rights of
Unitholders--Redemption of Units"). In the case of the Global Trusts, the
aggregate underlying value of the Equity Securities is computed on the basis of
the bid side value of the relevant currency exchange rate (offer side during the
initial offering period) expressed in U.S. dollars. If the supply of Units
exceeds demand or if some other business reason warrants it, the Sponsor may
either discontinue all purchases of Units or discontinue purchases of Units at
such prices. In the event that a market is not maintained for the Units and the
Unitholder cannot find another purchaser, a Unitholder desiring to dispose of
his Units will be able to dispose of such Units by tendering them to the Trustee
for redemption at the Redemption Price. See "Rights of Unitholders--Redemption
of UnitsA Unitholder who wishes to dispose of his Units should inquire of his
broker as to current market prices in order to determine whether there is in
existence any price in excess of the Redemption Price and, if so, the amount
thereof. Units sold prior to such time as the entire deferred sales charge on
such Units has been collected will be assessed the amount of 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 unpaid second year
deferred sales charge remaining after such date).
TAX-SHELTERED RETIREMENT PLANS. Units of the Trusts are available for
purchase in connection with certain types of tax-sheltered retirement plans,
including Individual Retirement Accounts for the individuals, Simplified
Employee Pension Plans for employees, qualified plans for self-employed
individuals, and qualified corporate pension and profit sharing plans for
employees. The purchase of Units of the Trusts may be limited by the plans'
provisions and does not itself establish such plans. The minimum purchase for
retirement plans is 25 Units but may vary by selling firm.
RIGHTS OF UNITHOLDERS
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CERTIFICATES. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trusts will be evidenced by certificates unless a
Unitholder or the Unitholder's registered broker-dealer makes a written request
to the Trustee that ownership be in book entry form. Units are transferable by
making a written request to the Trustee and, in the case of Units evidenced by a
certificate, by presentation and surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, and such certificate or
transfer instrument, exactly as his name appears on the records of the Trustee
and on the face of any certificate representing the Units to be transferred with
the signature guaranteed by a participant in the Securities Transfer Agents
Medallion Program ("STAMP") or such other signature guarantee program in
addition to, or in substitution for, STAMP as may be accepted by the Trustee. In
certain instances the Trustee may require additional documents such as, but not
limited to, trust instruments, certificates of death, appointments as executor
or administrator or certificates of corporate authority. Certificates will be
issued in denominations of one Unit or any whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require
a Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in connection
with each such transfer or interchange. Destroyed, stolen, mutilated or lost
certificates will be replaced upon delivery to the Trustee of satisfactory
indemnity, evidence of ownership and payment of expenses incurred. Mutilated
certificates must be surrendered to the Trustee for replacement.
DISTRIBUTIONS OF INCOME AND CAPITAL. Any dividends received by a Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account of such Trust. Other receipts (e.g., capital gains, proceeds from
the sale of Securities, etc.) are credited to the Capital Account of such Trust.
Proceeds from the sale of Securities made to meet redemptions of Units shall be
segregated within the Capital Account of a Trust from proceeds from the sale of
Securities made to satisfy the fees, expenses and charges of such Trust. In the
case of the Global Trusts, dividends to be credited to such accounts are first
converted into U.S. dollars at the applicable exchange rate.
The Trustee will distribute any income received with respect to any of the
Securities in a Trust on or about the Income Account Distribution Dates to
Unitholders of record on the preceding Income Account Record Dates. See "Summary
of Essential Financial Information". Proceeds received on the sale of any
Securities in a Trust, to the extent not used to meet redemptions of Units, pay
the deferred sales charge or pay fees and expenses, will be distributed
semi-annually on the Capital Account Distribution Dates to Unitholders of record
on the preceding Capital Account Record Dates. Proceeds received from the
disposition of any of the Securities after a record date and prior to the
following distribution date will be held in the Capital Account of the
appropriate Trust and not distributed until the next distribution date
applicable to such Capital Account. The Trustee is not required to pay interest
on funds held in the Capital or Income Accounts (but may itself earn interest
thereon and therefore benefits from the use of such funds).
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account. Unitholders will
initially receive their distributions in the form of an automatic reinvestment
into additional Units unless the Unitholder elects to receive distributions in
cash. See "Rights of Unitholders--Reinvestment Option." Persons who purchase
Units will commence receiving distributions only after such person becomes a
record owner. Notification to the Trustee of the transfer of Units is the
responsibility of the purchaser, but in the normal course of business such
notice is provided by the selling broker-dealer.
At the end of the initial offering period for each Trust and on or before the
tenth day of each month thereafter, the Trustee will deduct from the Capital
Account of the appropriate Trust amounts necessary to pay the fees and expenses
of such Trust (as determined on the basis set forth under "Fund Operating
Expenses"). The Trustee also may withdraw from the Income and Capital Accounts
such amounts, if any, as it deems necessary to establish a reserve for any
governmental charges payable out of each Trust. Amounts so withdrawn shall not
be considered a part of such Trust's assets until such time as the Trustee shall
return all or any part of such amounts to the appropriate accounts. In addition,
the Trustee may withdraw from the Income and Capital Accounts of the appropriate
Trust such amounts as may be necessary to cover redemptions of Units.
It is anticipated that any deferred sales charge will be collected from the
Capital Account. To the extent that amounts in the Capital Account are
insufficient to satisfy the then current deferred sales charge obligation,
Equity Securities will be sold to meet such shortfall. Distributions of amounts
necessary to pay the deferred portion of the sales charge will be made to an
account maintained by the Trustee for purposes of satisfying Unitholders'
deferred sales charge obligations.
REINVESTMENT OPTION. Unitholders of a Trust will initially have each
distribution of dividend income, capital gains and/or principal on their Units
automatically reinvested in additional Units of such Trust under the "Automatic
Reinvestment Option" (to the extent Units may be lawfully offered for sale in
the state in which the Unitholder resides). Brokers and dealers who distribute
Units to Unitholders pursuant to the Automatic Reinvestment Option may do so
through two options. Brokers and dealers can use the Dividend Reinvestment
Service through Depository Trust Company or purchase the available Automatic
Reinvestment Option CUSIP. If a broker or dealer decides to continue to utilize
the Dividend Reinvestment Service through the Depository Trust Company, the
broker or dealer must have access to a PTS terminal equipped with the Elective
Dividend System function (EDS) prior to the first Record Date set forth under
"Summary of Essential Financial Information". The second option available is to
purchase the appropriate CUSIP for automatic reinvestment. Unitholders receiving
Units of a Trust pursuant to participation in the Automatic Reinvestment Option
will be subject to the remaining deferred sales charge payments due on Units
(assuming for these purposes such Units had been outstanding during the primary
offering period). Unitholders may also elect to receive distributions of
dividend income, capital gains and/or principal on their Units in cash. To
receive cash, a Unitholder or his or her broker or agent must file with the
Trustee a written notice of election, together with any certificate representing
Units and other documentation that the Trustee may then require, at least five
days prior to the Record Date for which the first distribution is to apply. A
Unitholder's election to receive cash will apply to all Units of a Trust owned
by such Unitholder and such election will remain in effect until changed by the
Unitholder.
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market") or, until such
time as additional Units cease to be issued by a Trust (see "The Fund"),
distributions may be reinvested in such additional Units. If Units are
unavailable in the secondary market, distributions which would otherwise have
been reinvested shall be paid in cash to the Unitholder on the applicable
Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
based on the net asset value for Units of a Trust as of the Evaluation Time on
the related Income or Capital Account Distribution Dates plus any remaining
deferred sales charge. Under the reinvestment plan, a Trust will pay the
Unitholder's distributions to the Trustee which in turn will purchase for such
Unitholder full and fractional Units of a Trust and will send such Unitholder a
statement reflecting the reinvestment.
Unitholders may also elect to have each distribution of interest income,
capital gains and/or principal on their Units automatically reinvested in Class
A shares of Van Kampen American Capital or Morgan Stanley mutual funds which are
registered in the Unitholder's state of residence. Such mutual funds are
hereinafter collectively referred to as the "Reinvestment Funds".
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each Reinvestment
Fund describes the investment policies of such fund and sets forth the
procedures to follow to commence reinvestment. A Unitholder may obtain a
prospectus for the respective Reinvestment Funds from Van Kampen American
Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace, Illinois
60181. Texas residents who desire to reinvest may request that a broker-dealer
registered in Texas send the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units will,
on the applicable distribution date, automatically be applied, as directed by
such person, as of such distribution date by the Trustee to purchase shares (or
fractions thereof) of the applicable Reinvestment Fund at a net asset value as
computed as of the close of trading on the New York Stock Exchange on such date.
Unitholders with an existing Guaranteed Reinvestment Option (GRO) Program
account (whereby a sales charge is imposed on distribution reinvestments) may
transfer their existing account into a new GRO account which allows purchases of
Reinvestment Fund shares at net asset value as described above. Confirmations of
all reinvestments by a Unitholder into a Reinvestment Fund will be mailed to the
Unitholder by such Reinvestment Fund.
A participant may at any time prior to five days preceding the next
succeeding distribution date, by so notifying the Trustee in writing, elect to
terminate his or her reinvestment plan and receive future distributions on his
or her Units in cash. There will be no charge or other penalty for such
termination. The Sponsor, each Reinvestment Fund, and its investment adviser
shall have the right to suspend or terminate the reinvestment plan at any time.
REPORTS PROVIDED. The Trustee shall furnish Unitholders of a Trust in
connection with each distribution a statement of the amount of income and the
amount of other receipts (received since the preceding distribution), if any,
being distributed, expressed in each case as a dollar amount representing the
pro rata share of each Unit of a Trust outstanding. Within a reasonable period
of time after the end of each calendar year, the Trustee shall furnish to each
person who at any time during the calendar year was a registered Unitholder of a
Trust a statement (i) as to the Income Account: income received, deductions for
applicable taxes and for fees and expenses of such Trust, for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a dollar
amount representing the pro rata share of each Unit outstanding on the last
business day of such calendar year; (ii) as to the Capital Account: the dates of
disposition of any Securities and the net proceeds received therefrom,
deductions for payment of applicable taxes, fees and expenses of such Trust held
for distribution to Unitholders of record as of a date prior to the
determination and the balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each Unit outstanding on the last business day of such
calendar year; (iii) a list of the Securities held by such Trust and the number
of Units of such Trust outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit of such Trust based upon the last
computation thereof made during such calendar year; and (v) amounts actually
distributed during such calendar year from the Income and Capital Accounts of
such Trust, separately stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in a Trust furnished to it by the Evaluator.
REDEMPTION OF UNITS. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay Street,
20th Floor, New York, New York 10286 and, in the case of Units evidenced by a
certificate, by tendering such certificate to the Trustee, duly endorsed or
accompanied by proper instruments of transfer with signature guaranteed as
described above (or by providing satisfactory indemnity, as in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. No redemption fee will be charged. On the third
business day following such tender, the Unitholder will be entitled to receive
in cash (unless the redeeming Unitholder elects an In Kind Distribution as
described below) an amount for each Unit equal to the Redemption Price per Unit
next computed after receipt by the Trustee of such tender of Units and in the
case of the Global Trusts converted into U.S. dollars as of the Evaluation Time
set forth under "Summary of Essential Financial Information". The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received after the applicable Evaluation Time,
the date of tender is deemed to be the next business day as defined under
"Public Offering--Offering Price" and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the redemption price
computed on that day. Foreign stock exchanges are open for trading on certain
days which are U.S. holidays on which the Fund will not transact business. The
foreign Securities will continue to trade on those days and thus the value of
the Global Trusts may be significantly affected on days when a Unitholder cannot
sell or redeem his Units. Units redeemed prior to such time as the entire
deferred sales charge has been collected will be assessed the amount of the
remaining deferred sales charge at the time of redemption (however, Units
redeemed on or prior to the first Special Redemption Date will not be assessed
the unpaid second year deferred sales charge remaining after such date).
An investment in Units of a Trust will be redeemed 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 a 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 Unitholders), (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 in writing on the first
Rollover Notification Date to become Rollover Unitholders, 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.
The Trustee is empowered to sell Securities of a Trust in order to make funds
available for redemption if funds are not otherwise available in the Capital and
Income Accounts of such Trust to meet redemptions. The Securities to be sold
will be selected by the Trustee from those designated on a current list provided
by the Supervisor for this purpose. Units so redeemed shall be cancelled. Units
tendered for redemption prior to such time as the entire deferred sales charge
on such Units has been collected will be assessed the amount of the remaining
deferred sales charge at the time of redemption.
Unitholders tendering 1,000 or more Units of a Trust for redemption may
request from the Trustee an in kind distribution ("In Kind Distribution") of an
amount and value of U.S.-traded Securities per Unit (plus cash) equal to the
Redemption Price per Unit as determined as of the evaluation next following the
tender. An In Kind Distribution on redemption of Units will be made by the
Trustee through the distribution of each of the U.S.-traded Securities in
book-entry form to the account of the Unitholder's bank or broker-dealer 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 tendering
Unitholder will receive his pro rata number of whole shares of each of the
U.S.-traded Securities comprising a Trust portfolio and cash from the Capital
Account equal to the pro rata portion of any foreign exchange-traded Securities
(in the Strategic Thirty and Strategic Fifteen Trusts) and any fractional shares
to which the tendering Unitholder is entitled. The Trustee may adjust the number
of shares of any issue of Securities included in a Unitholder's In Kind
Distribution to facilitate the distribution of whole shares, such adjustment to
be made on the basis of the value of Securities on the date of tender. If funds
in the Capital Account are insufficient to cover the required cash distribution
to the tendering Unitholder, the Trustee may sell Securities according to the
criteria discussed above.
To the extent that Securities are redeemed in kind or sold, the size of a
Trust will be, and the diversity of such Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result in
lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder depending
on the value of the Securities in the portfolio at the time of redemption.
Special U.S. federal income tax consequences will result if a Unitholder
requests an In Kind Distribution. See "Taxation".
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the aggregate underlying
value of the Equity Securities in each Trust, plus or minus cash, if any, in the
Income and Capital Accounts of such Trust. On the Initial Date of Deposit, the
Public Offering Price per Unit (which includes the sales charge) exceeded the
values at which Units could have been redeemed by the amounts shown under
"Summary of Essential Financial Information". The Redemption Price per Unit is
the pro rata share of each Unit in each Trust determined on the basis of (i) the
cash on hand in such Trust, (ii) the value of the Securities in such Trust and
(iii) dividends receivable on the Equity Securities of such Trust trading
ex-dividend as of the date of computation, less (a) amounts representing taxes
or other governmental charges payable out of such Trust, (b) the accrued
expenses of such 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 unpaid $0.15 per Unit deferred
sales charge remaining after such date). The Evaluator may determine the value
of the Equity Securities in a Trust in the following manner: If the Equity
Securities are listed on a national or foreign securities exchange, this
evaluation is generally based on the closing sale prices on that exchange
(unless it is determined that these prices are inappropriate as a basis for
valuation) or, if there is no closing sale price on that exchange, at the
closing bid prices. If the Equity Securities of a Trust are not so listed or, if
so listed and the principal market therefore is other than on the exchange, the
evaluation shall generally be based on the current bid price on the
over-the-counter market (unless these prices are inappropriate as a basis for
evaluation). If current bid prices are unavailable, the evaluation is generally
determined (a) on the basis of current bid prices for comparable securities, (b)
by appraising the value of the Equity Securities of such Trust on the bid side
of the market or (c) by any combination of the above. In the case of the Global
Trusts, the value of the Equity Securities in the secondary market is based on
the aggregate value of the foreign Securities computed on the basis of the bid
side value of the relevant currency exchange rate expressed in U.S. dollars as
of the Evaluation Time.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or an
emergency exists, as a result of which disposal or evaluation of the Securities
in a Trust is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit.
SPECIAL REDEMPTION AND ROLLOVER IN NEW FUND. It is expected that a special
redemption will be made of all Units of each Trust held by any Unitholder (a
"Rollover Unitholder") who affirmatively notifies the Trustee in writing that he
desires to rollover his Units by either Rollover Notification Date.
All Units of Rollover Unitholders will be redeemed on the related Special
Redemption Date and the underlying Securities will be distributed to the
Distribution Agent on behalf of the Rollover Unitholders. On the related Special
Redemption Date (as set forth in "Summary of Essential Financial Information"),
the Distribution Agent will be required to sell all of the underlying Securities
on behalf of Rollover Unitholders. The sales proceeds will be net of brokerage
fees, governmental charges or any expenses involved in the sales.
The Distribution Agent will attempt to sell Securities as quickly as is
practicable on the appropriate Special Redemption Date. The Sponsor does not
anticipate that the period will be longer than one day given that the Securities
are usually highly liquid. However, certain of the factors discussed under "Risk
Factors" could affect the ability of the Sponsor to sell the Securities of the
Global Trusts and thereby affect the length of the sale period somewhat. The
liquidity of any Security depends on the daily trading volume of the Security
and the amount that the Sponsor has available for sale on any particular day.
Pursuant to an exemptive order, each terminating Trust (and the Distribution
Agent on behalf of Rollover Unitholders) can sell Securities to a New Series if
those Securities continue to meet the related investment strategy of the
respective Series. The exemption will enable each Trust to eliminate commission
costs on these transactions. The price for those securities will be the closing
sale price on the sale date on the exchange where the Securities are principally
traded, as certified by the Trustee.
The Rollover Unitholders' proceeds will be invested in the then current
series of the Fund (the "New Fund"), if then being offered, the trusts of which
will contain portfolios selected in accordance with the indexing strategies of
the Trusts in this Fund. The proceeds of redemption will be used to buy New Fund
units in the appropriate portfolio as the proceeds become available.
The Sponsor intends to create a New Fund shortly prior to each Special
Redemption Date, dependent upon the availability and reasonably favorable prices
of the Securities included in the New Fund portfolios, and it is intended that
Rollover Unitholders will be given first priority to purchase the New Fund
units. There can be no assurance, however, as to the exact timing of the
creation of the New Fund units or the aggregate number of units in each trust
portfolio which the Sponsor will create. The Sponsor may, in its sole
discretion, stop creating new units in each trust portfolio at any time it
chooses, regardless of whether all proceeds of the Special Redemption have been
invested on behalf of Rollover Unitholders. Cash which has not been invested on
behalf of the Rollover Unitholders in New Fund units will be distributed shortly
after the related Special Redemption Date.
Any Rollover Unitholder may thus be redeemed out of the Fund and become a
holder of an entirely different unit investment trust with a different portfolio
of Securities. The Rollover Unitholders' Units will be redeemed and the
distributed Securities shall be sold on the related Special Redemption Date. In
accordance with the Rollover Unitholders' offer to purchase the New Fund units,
the proceeds of the sales (and any other cash distributed upon redemption) will
be invested in the appropriate portfolio at the public offering price, including
the applicable sales charge.
This process of redemption and rollover into a new trust is intended to allow
for the fact that the portfolios selected by the Sponsor are chosen on the basis
of growth and income potential for the near term, at which point a new portfolio
is chosen. It is contemplated that a similar process of redemption and rollover
in new unit investment trusts will be available for each subsequent series of
the Fund.
There can be no assurance that the redemption and rollover will avoid any
negative market price consequences stemming from the trading of large volumes of
securities and of the underlying Securities. The above procedures may be
insufficient or unsuccessful in avoiding such price consequences. In fact,
market price trends may make it advantageous to sell or buy more quickly or more
slowly than permitted by these procedures.
It should also be noted that Rollover Unitholders may realize taxable capital
gains on the Special Redemption and Rollover but, in certain circumstances, will
not be entitled to a deduction for certain capital losses and, due to the
procedures for investing in the subsequent Trust, no cash would be distributed
at that time to pay any taxes. Included in the cash for the Special Redemption
and Rollover will be any amount of cash attributable to the last distribution of
dividend income; accordingly, Rollover Unitholders also will not have such cash
distributed to pay any taxes. See "Taxation". Unitholders who do not inform the
Distribution Agent that they wish to have their Units so redeemed and liquidated
will not realize capital gains or losses due to either Special Redemption and
Rollover.
The Sponsor may for any reason, in its sole discretion, decide not to sponsor
a subsequent series of the Fund, without penalty or incurring liability to any
Unitholder. If the Sponsor so decides, the Sponsor shall notify the Unitholders
before each Special Redemption Date would have commenced. The Sponsor may modify
the terms of any subsequent series of the Fund. The Sponsor may also modify the
terms of the Special Redemption and Rollover upon notice to the Unitholders
prior to the related Rollover Notification Date.
FUND ADMINISTRATION
- --------------------------------------------------------------------------------
SPONSOR PURCHASES OF UNITS. The Trustee shall notify the Sponsor of any Units
tendered for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such Units
by notifying the Trustee before the close of business on the next succeeding
business day and by making payment therefor to the Unitholder not later than the
day on which the Units would otherwise have been redeemed by the Trustee. Units
held by the Sponsor may be tendered to the Trustee for redemption as any other
Units.
The offering price of any Units acquired by the Sponsor will be in accord
with the Public Offering Price described in the then currently effective
prospectus describing such Units. Any profit resulting from the resale of such
Units will belong to the Sponsor which likewise will bear any loss resulting
from a lower offering or redemption price subsequent to its acquisition of such
Units.
PORTFOLIO ADMINISTRATION. The portfolios of the Fund are not "managed" by the
Sponsor, Supervisor or the Trustee; their activities described herein are
governed solely by the provisions of the Trust Agreement. Traditional methods of
investment management for a managed fund typically involve frequent changes in a
portfolio of securities on the basis of economic, financial and market analyses.
The Fund, however, will not be managed. The Trust Agreement, however, provides
that the Sponsor may (but need not) direct the Trustee to dispose of an Equity
Security in certain events such as the issuer having defaulted on the payment on
any of its outstanding obligations or the price of an Equity Security has
declined to such an extent or other such credit factors exist so that in the
opinion of the Sponsor the retention of such Securities would be detrimental to
a Trust. Pursuant to the Trust Agreement and with limited exceptions, the
Trustee may sell any securities or other properties acquired in exchange for
Equity Securities such as those acquired in connection with a merger or other
transaction. If offered such new or exchanged securities or property, the
Trustee shall reject the offer. However, in the event such securities or
property are nonetheless acquired by a Trust, they may be accepted for deposit
in such Trust and either sold by the Trustee or held in such Trust pursuant to
the direction of the Sponsor (who may rely on the advice of the Supervisor).
Proceeds from the sale of Securities (or any securities or other property
received by the Fund in exchange for Equity Securities) are credited to the
Capital Account for distribution to Unitholders or to pay fees and expenses of
the Trusts. Except as stated under "Trust Portfolios" for failed securities and
as provided in this paragraph, the acquisition by a Trust of any securities
other than the Securities is prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above, the
Trustee may also sell Securities designated by the Supervisor, or if no such
designation has been made, in its own discretion, for the purpose of redeeming
Units of a Trust tendered for redemption and the payment of expenses.
To the extent practicable, the Supervisor may (but is not obligated to)
designate Securities to be sold by the Trustee in order to maintain the
proportionate relationship among the number of shares of individual issues of
Equity Securities in a Trust. To the extent this is not practicable, the
composition and diversity of the Equity Securities in such Trust may be altered.
In order to obtain the best price for a Trust, it may be necessary for the
Supervisor to specify minimum amounts (generally 100 shares) in which blocks of
Equity Securities are to be sold. In effecting purchases and sales of a Trust's
portfolio securities, the Sponsor may direct that orders be placed with and
brokerage commissions be paid to brokers, including brokers which may be
affiliated with the Trust, the Sponsor or dealers participating in the offering
of Units. In addition, in selecting among firms to handle a particular
transaction, the Sponsor may take into account whether the firm has sold or is
selling units or unit investment trusts which is sponsors.
AMENDMENT OR TERMINATION. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders (as determined in good faith by the Sponsor and
the Trustee), provided, however, that the Trust Agreement may not be amended to
increase the number of Units (except as provided in the Trust Agreement). The
Trust Agreement may also be amended in any respect by the Trustee and Sponsor,
or any of the provisions thereof may be waived, with the consent of the holders
representing 51% of the Units of a Trust then outstanding, provided that no such
amendment or waiver will reduce the interest in such Trust of any Unitholder
without the consent of such Unitholder or reduce the percentage of Units
required to consent to any such amendment or waiver without the consent of all
Unitholders. The Trustee shall advise the Unitholders of any amendment promptly
after execution thereof.
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 Unitholders), (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 Unitholders, 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 Equity Securities owned by a Trust, as shown by any evaluation, is
less than that amount set forth under Minimum Termination Value in the "Summary
of Essential Financial Information." 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 on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Fund. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. The Sponsor shall direct the liquidation of the Securities in such
manner as to effectuate orderly sales and a minimal market impact. In the event
the Sponsor does not so direct, the Securities shall be sold within a reasonable
period and in such manner as the Trustee, in its sole discretion, shall
determine. At least 30 days before the Mandatory Termination Date the Trustee
will provide written notice of any termination to all Unitholders of the
appropriate Trust and 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 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 (see
"Rights of Unitholders--Special Redemption and Rollover in New Fund"). There is,
however, no assurance that units of any new series of such Fund will be offered
for sale at that time, or if offered, that there will be sufficient units
available for sale to meet the requests of any or all Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
LIMITATIONS ON LIABILITIES. The Sponsor, the Evaluator, the Supervisor and
the Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder.
The Trustee shall not be liable for depreciation or loss incurred by reason
of the sale by the Trustee of any of the Securities. In the event of the failure
of the Sponsor to act under the Trust Agreement, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under the Trust
Agreement. The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the interest
thereon or upon it as Trustee under the Trust Agreement or upon or in respect of
a Trust which the Trustee may be required to pay under any present or future law
of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be made
in good faith upon the basis of the best information available to it, provided,
however, that the Evaluator shall be under no liability to the Trustee, Sponsor
or Unitholders for errors in judgment. This provision shall not protect the
Evaluator in any case of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
SPONSOR. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect subsidiary
of VK/AC Holding, Inc. VK/AC Holding, Inc. is a wholly owned subsidiary of MSAM
Holdings II, Inc., which in turn is a wholly owned subsidiary of Morgan Stanley
Dean Witter & 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, 1996, the
total stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not to
the 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. 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 of the Fund. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may from
time to time be required under any applicable state or federal statute, rule or
regulation (see "Rights of Unitholders--Reports Provided"). The Trustee is
required to keep a certified copy or duplicate original of the Trust Agreement
on file in its office available for inspection at all reasonable times during
the usual business hours by any Unitholder, together with a current list of the
Securities held in each Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
- --------------------------------------------------------------------------------
LEGAL OPINIONS. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor. Winston & Strawn has acted as counsel for the Trustee.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. The statements of condition and the
related securities portfolios at the Initial Date of Deposit included in this
Prospectus have been audited by Grant Thornton LLP, independent certified public
accountants, as set forth in their report in this Prospectus, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen American Capital Equity Opportunity Trust,
Series 94:
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen American Capital Equity Opportunity Trust, Series 94 as
of May 11, 1998. The statements of condition and portfolios are the
responsibility of the Sponsor. Our responsibility is to express an opinion on
such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of irrevocable letters of credit deposited to purchase securities
by correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion. In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Van Kampen American Capital Equity
Opportunity Trust, Series 94 as of May 11, 1998, in conformity with generally
accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
May 11, 1998
<TABLE>
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 94
STATEMENTS OF CONDITION
AS OF MAY 11, 1998
STRATEGIC
STRATEGIC TEN STRATEGIC
TEN UNITED TEN
UNITED STATES UNITED
STATES TRADITIONAL KINGDOM
INVESTMENT IN SECURITIES TRUST TRUST TRUST
--------------- --------------- --------------
<S> <C> <C> <C>
Contracts to purchase Securities (1) $ $ $
Organizational costs (2)
--------------- --------------- ---------------
Total $ $ $
=============== =============== ==============
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Accrued organizational costs (2) $ $ $
Deferred sales charge liability (3)
Interest of Unitholders--
Cost to investors (4)
Less: Gross underwriting commission (4)(5)
--------------- --------------- --------------
Net interest to Unitholders (4)
--------------- --------------- --------------
Total $ $ $
=============== =============== ==============
- --------------------------------------------------------------------------------
(1)The aggregate value of the Securities listed under "Portfolios" herein and
their cost to each Trust are the same. The value of the Securities is
determined by Interactive Data Corporation on the bases set forth under
"Public Offering--Offering Price". The contracts to purchase Securities are
collateralized by separate irrevocable letters of credit of $________,
$_______, and $_______ which have been deposited with the Trustee with
respect to the Strategic Ten United States, Strategic Ten United States
Traditional and Strategic Ten United Kingdom Trusts, respectively.
(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 $__________, $_________, and
$_________ for the Strategic Ten United States, Strategic Ten United States
Traditional and Strategic Ten United Kingdom Trusts, respectively. To the
extent a Trust is larger or smaller, the estimate will vary. Securities will
be sold to pay organizational costs.
(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--General" and
"Public Offering--Sponsor and Other Compensation" and assume all single
transactions involve less than 5,000 Units. For single transactions involving
5,000 or more Units, the sales charge is reduced (see "Public
Offering--General") resulting in an equal reduction in both the Cost to
investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.
(5)Assumes only the first year sales charge.
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 94
STATEMENTS OF CONDITION (CONTINUED)
AS OF MAY 11, 1998
STRATEGIC
STRATEGIC STRATEGIC FIVE
TEN FIVE UNITED
HONG UNITED STATES
KONG STATES TRADITIONAL
INVESTMENT IN SECURITIES TRUST TRUST TRUST
--------------- --------------- --------------
<S> <C> <C> <C>
Contracts to purchase Securities (1) $ $ $
Organizational costs (2)
--------------- --------------- ---------------
Total $ $ $
=============== =============== ==============
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Accrued organizational costs (2) $ $ $
Deferred sales charge liability (3)
Interest of Unitholders--
Cost to investors (4)
Less: Gross underwriting commission (4)(5)
--------------- --------------- --------------
Net interest to Unitholders (4)
--------------- --------------- --------------
Total $ $ $
=============== =============== ==============
- --------------------------------------------------------------------------------
(1)The aggregate value of the Securities listed under "Portfolios" herein and
their cost to each Trust are the same. The value of the Securities is
determined by Interactive Data Corporation on the bases set forth under
"Public Offering--Offering Price". The contracts to purchase Securities are
collateralized by separate irrevocable letters of credit of $________,
$_______, and $_______ which have been deposited with the Trustee with
respect to the Strategic Ten Hong Kong, Strategic Five United States and
Strategic Five United States Traditional Trusts, respectively.
(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 $__________, $_________, and
$_________ for the Strategic Ten Hong Kong, Strategic Five United States and
Strategic Five United States Traditional Trusts, respectively. To the extent
a Trust is larger or smaller, the estimate will vary. Securities will be sold
to pay organizational costs.
(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--General" and
"Public Offering--Sponsor and Other Compensation" and assume all single
transactions involve less than 5,000 Units. For single transactions involving
5,000 or more Units, the sales charge is reduced (see "Public
Offering--General") resulting in an equal reduction in both the Cost to
investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.
(5)Assumes only the first year sales charge.
<CAPTION>
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST,
SERIES 94
STATEMENTS OF CONDITION (CONTINUED)
AS OF MAY 11, 1998
STRATEGIC STRATEGIC
THIRTY FIFTEEN STRATEGIC EAFE
GLOBAL GLOBAL PICKS STRATEGIC
INVESTMENT IN SECURITIES TRUST TRUST TRUST 20 TRUST
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Contracts to purchase Securities (1) $ $ $ $
Organizational costs (2)
--------------- --------------- --------------- ---------------
Total $ $ $ $
=============== =============== =============== ===============
LIABILITIES AND INTEREST OF UNITHOLDERS
Liabilities--
Accrued organizational costs (2) $ $ $ $
Deferred sales charge liability (3)
Interest of Unitholders--
Cost to investors (4)
Less: Gross underwriting commission (4)(5)
--------------- --------------- --------------- ---------------
Net interest to Unitholders (4)
--------------- --------------- --------------- ---------------
Total $ $ $ $
=============== =============== =============== ===============
- --------------------------------------------------------------------------------
(1)The aggregate value of the Securities listed under "Portfolios" herein and
their cost to each Trust are the same. The value of the Securities is
determined by Interactive Data Corporation on the bases set forth under
"Public Offering--Offering Price". The contracts to purchase Securities are
collateralized by separate irrevocable letters of credit of $_________,
$_______, $______ and $_____ which have been deposited with the Trustee with
respect to the Strategic Thirty Global, Strategic Fifteen Global, Strategic
Picks and EAFE Strategic 20 Trusts, respectively.
(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 $_________, $_________,
$_________ and $_________ for the Strategic Thirty Global, Strategic Fifteen
Global, Strategic Picks and EAFE Strategic 20 Trusts, respectively. To the
extent a Trust is larger or smaller, the estimate will vary. Securities will
be sold to pay organizational costs.
(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--General" and
"Public Offering--Sponsor and Other Compensation" and assume all single
transactions involve less than 5,000 Units. For single transactions involving
5,000 or more Units, the sales charge is reduced (see "Public
Offering--General") resulting in an equal reduction in both the Cost to
investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.
(5)Assumes only the first year sales charge.
</TABLE>
<TABLE>
<CAPTION>
STRATEGIC TEN TRUST UNITED STATES PORTFOLIO, MAY 1998 SERIES PORTFOLIO (VAN
KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94) AS OF THE INITIAL
DATE OF DEPOSIT: MAY 11, 1998
- ------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
- ---------- ------------------
$
========== ==================
<CAPTION>
STRATEGIC TEN TRUST UNITED STATESPORTFOLIO, MAY 1998 TRADITIONAL SERIES
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94) AS
OF THE INITIAL DATE OF DEPOSIT: MAY 11, 1998
- -------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
- ---------- ------------------
$
========== ==================
<CAPTION>
STRATEGIC TEN TRUST UNITED KINGDOM PORTFOLIO, MAY 1998 SERIES PORTFOLIO (VAN
KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94) AS OF THE INITIAL
DATE OF DEPOSIT: MAY 11, 1998
- ----------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
- ---------- ------------------
$
========== ==================
<CAPTION>
STRATEGIC TEN TRUST HONG KONG PORTFOLIO, MAY 1998 SERIES PORTFOLIO (VAN KAMPEN
AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94) AS OF THE INITIAL DATE OF
DEPOSIT: MAY 11, 1998
- ----------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
- ---------- ------------------
$
========== ==================
<CAPTION>
STRATEGIC FIVE TRUST UNITEDSTATES PORTFOLIO, MAY 1998 SERIES PORTFOLIO (VAN
KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94) AS OF THE INITIAL
DATE OF DEPOSIT: MAY 11, 1998
- ----------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
- ---------- ------------------
$
========== ==================
<CAPTION>
STRATEGIC FIVE TRUST UNITED STATES PORTFOLIO, MAY 1998 TRADITIONAL SERIES
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94) AS
OF THE INITIAL DATE OF DEPOSIT: MAY 11, 1998
- ----------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
- ---------- ------------------
$
========== ==================
<CAPTION>
STRATEGIC THIRTY TRUST GLOBAL PORTFOLIO, MAY 1998 SERIES PORTFOLIO (VAN KAMPEN
AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94) AS OF THE INITIAL DATE OF
DEPOSIT: MAY 11, 1998
- -------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
DJIA COMPANIES:
FT INDEX COMPANIES:
HANG SENG INDEX COMPANIES:
- ---------- ------------------
$
========== ==================
<CAPTION>
STRATEGIC FIFTEEN TRUST GLOBAL PORTFOLIO, MAY 1998 SERIES PORTFOLIO (VAN KAMPEN
AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94) AS OF THE INITIAL DATE OF
DEPOSIT: MAY 11, 1998
- -------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
DJIA COMPANIES:
FT INDEX COMPANIES:
HANG SENG INDEX COMPANIES:
- ---------- ------------------
$
========== ==================
<CAPTION>
STRATEGIC PICKS OPPORTUNITY TRUST, MAY 1998 SERIES
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94)
AS OF THE INITIAL DATE OF DEPOSIT: MAY 11, 1998
- ------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
- ---------- ------------------
$
========== ==================
<CAPTION>
EAFE STRATEGIC 20 TRUST, MAY 1998 SERIES
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94)
AS OF THE INITIAL DATE OF DEPOSIT: MAY 11, 1998
- ----------------------------------------------------------------------------------------------------------------------
ESTIMATED
ANNUAL COST OF
NUMBER MARKET VALUE DIVIDENDS SECURITIES
OF SHARES NAME OF ISSUER (1) PER SHARE (2) PER SHARE (2) TO TRUST (2)
- ---------- -------------------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
$ $ $
- ---------- ------------------
$
========== ==================
</TABLE>
NOTES TO PORTFOLIOS
- --------------------------------------------------------------------------------
(1) All of the Securities are represented by "regular way" contracts for the
performance of which an irrevocable letter of credit has been deposited with
the Trustee. At the Initial Date of Deposit, the Sponsor has assigned to the
Trustee all of its right, title and interest in and to such Securities.
Contracts to acquire Securities were entered into on May 10, 1998 and May
11, 1998 and have settlement dates ranging from May __, 1998 to May __, 1998
(see "The Fund").
(2) The market value of each of the Equity Securities is based on the closing
sale price of each Security on the applicable exchange (converted into U.S.
dollars at the offer side of the exchange rate at the Evaluation Time in the
case of the Global Trusts) on the day prior to the Initial Date of Deposit.
Estimated annual dividends are based on the most recently declared dividends
or, with respect to dividends of foreign Securities in the Global Trusts, on
the most recent interim and final dividends declared (converted into U.S.
dollars at the offer side of the exchange rate at the Evaluation Time).
Estimated annual dividends of foreign Securities in the Global Trusts
reflect the net amounts after giving effect to foreign withholding taxes.
The aggregate value of the Securities at the Evaluation Time for the Global
Trusts (based on the closing sale price of each Security and, if applicable,
converted into U.S. dollars at the bid side of the related currency exchange
rate at the Evaluation Time) was $_______, $_______, $_______, $_______ and
$_______ for the United Kingdom, Hong Kong, Strategic Thirty Trust,
Strategic Fifteen Trust and EAFE Strategic 20 Trust respectively. This is
the basis on which the Redemption Price per Unit will be determined. The
offer side exchange rates of the Securities in the Global Trusts (the basis
on which the Public Offering Price per Unit will be determined during the
initial offering period) is greater than the related bid side values. Other
information regarding the Securities in the Fund, as of the Initial Date of
Deposit (converted into U.S. dollars at the offer side of the exchange rate
at the Evaluation Time in the case of the Global Trusts), is as follows:
<TABLE>
<CAPTION>
AGGREGATE
PROFIT ESTIMATED
COST TO (LOSS) TO ANNUAL
SPONSOR SPONSOR DIVIDENDS
-------------- -------------- --------------
<S> <C> <C>
Strategic Ten United States Trust $ $ -- $
Strategic Ten United States Traditional Trust $ $ -- $
Strategic Ten United Kingdom Trust $ $ -- $
Strategic Ten Hong Kong Trust $ $ -- $
Strategic Five United States Trust $ $ -- $
Strategic Five United States Traditional Trust$ $ -- $
Strategic Thirty Global Trust $ $ $
Strategic Fifteen Global Trust $ $ $
Strategic Picks Trust $ $ -- $
EAFE Strategic 20 Trust $ $ -- $
-------------------------------------------------
</TABLE>
An affiliate of the Sponsor may have participated as issuer, sole
underwriter, managing underwriter or member of an underwriting syndicate in a
public offering of one or more of the stocks in the Trust. An affiliate of the
Sponsor may serve as a specialist in the stocks in the Trust on one or more
stock exchanges and may have a long or short position in any of these stocks or
in options on any of these stocks, and may be on the opposite side of public
orders executed on the floor of an exchange where such stocks are listed. An
officer, director or employee of the Sponsor or an affiliate may be an officer
or director of one or more of the issuers of the stocks in the Trusts. An
affiliate of the Sponsor may trade for its own account as an odd-lot dealer,
market maker, block positioner and/or arbitrageur in any stocks or options
relating thereto. The Sponsor, its affiliates, directors, elected officers and
employee benefit programs may have either a long or short position in any stock
or option of the issuers.
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the Fund
or the Sponsor. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any person to whom
it is not lawful to make such offer in such state.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
TITLE PAGE
----- ----
Summary of Essential Financial Information.. 5
Fee Table................................... 9
The Fund.................................... 12
Objectives and Securities Selection......... 14
Trust Portfolios............................ 16
Strategic Ten Trust United States Portfolios 21
Strategic Ten Trust United Kingdom Portfolio 27
Strategic Ten Trust Hong Kong Portfolio..... 32
Strategic Five Trust United States Portfolios 37
Strategic Thirty Trust Global Portfolio..... 43
Strategic Fifteen Trust Global Portfolio.... 52
Strategic Picks Opportunity Trust........... 59
EAFE Strategic 20 Trust..................... 65
Risk Factors................................ 70
Taxation.................................... 79
Fund Operating Expenses..................... 85
Public Offering............................. 87
Rights of Unitholders....................... 92
Fund Administration......................... 98
Other Matters............................... 103
Report of Independent Certified
Public Accountants........................ 104
Statements of Condition .................... 105
Portfolios.................................. 108
Notes to Portfolios......................... 114
- --------------
This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration statement
and exhibits relating thereto, which the Fund has filed with the Securities and
Exchange Commission, Washington, D.C., under the Securities Act of 1933 and the
Investment Company Act of 1940, and to which reference is hereby made.
- ------------------
When Units of the Trusts are no longer available, or for investors who will
reinvest into subsequent series of the Trusts, this When Units of the Trusts are
no longer available, or for investors who will reinvest into subsequent series
of the Trusts, this Propsectus may be used as a preliminary prospectus for a
future series, in which case investors would note the following:
Information contained herein is subject to completion or amendment. A
registration statement relating to securities of a future series has been filed
with the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. The Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
- --------------------------------------------------------------------------------
MAY 11, 1998
VAN KAMPEN
AMERICAN CAPITAL
EQUITY OPPORTUNITY
TRUST, SERIES 91
STRATEGIC TEN TRUST
UNITED STATES PORTFOLIO,
MAY 1998 SERIES
UNITED STATES PORTFOLIO,
MAY 1998 TRADITIONAL SERIES
UNITED KINGDOM PORTFOLIO,
MAY 1998 SERIES
HONG KONG PORTFOLIO,
MAY 1998 SERIES
STRATEGIC FIVE TRUST
UNITED STATES PORTFOLIO,
MAY 1998 SERIES
UNITED STATES PORTFOLIO,
MAY 1998 TRADITIONAL SERIES
STRATEGIC THIRTY TRUST
GLOBAL PORTFOLIO,
MAY 1998 SERIES
STRATEGIC FIFTEEN TRUST
GLOBAL PORTFOLIO,
MAY 1998 SERIES
STRATEGIC PICKS
OPPORTUNITY TRUST,
MAY 1998 SERIES
EAFE STRATEGIC
20 TRUST,
MAY 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.
S-1
CONTENTS OF REGISTRATION STATEMENT
This Amendment No. 3 to the 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 Proposed form of Trust Agreement (to be supplied by amendment).
3.1 Opinion and consent of counsel as to legality of securities being
registered (to be supplied by amendment).
3.2 Opinion and consent of counsel as to New York tax status of securities
being registered (to be supplied by amendment).
3.3 Opinion and consent of counsel as to United Kingdom tax status of
securities being registered (to be supplied by amendment).
4.1 Consent of Interactive Data Corporation (to be supplied by amendment).
4.2 Consent of Grant Thornton LLP (to be supplied by amendment).
EX-27 Financial Data Schedule (to be supplied by amendment).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series 94 has
duly caused this Amendment No. 3 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 30th day of April, 1998.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 94
(Registrant)
By VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
(Depositor)
GINA COSTELLO______________________________________
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed below on April 30,
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 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. 333-33087) and Van Kampen American Capital Equity
Opportunity Trust, Series 87 (File No. 333-44581) and the same are hereby
incorporated herein by this reference.
