File No. 33-36502
CIK #867205
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 6
to
Form S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
Van Kampen Merritt Utility Income Trust, Series 4
(Exact Name of Trust)
Van Kampen Merritt Inc.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
Van Kampen Merritt Inc. Chapman and Cutler
Attention: John C. Merritt Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective
on April 25, 1994 pursuant to paragraph (b) of Rule 485.
SERIES 4
925,393 Units
VAN KAMPEN MERRITT
UTILITY INCOME TRUST
PROSPECTUS PART ONE
NOTE: Part One of this Prospectus may not be distributed unless accompanied by
Part Two.
Please retain both parts of this Prospectus for future reference.
THE TRUST
The above-named series of Van Kampen Merritt Utility Income Trust (the
"Trust") consists of a fixed portfolio of equity securities of companies
diversified within the electric public utility industry (the "Securities").
Each Unit represents a fractional undivided interest in the capital and net
dividend income of the Trust (see "Summary of Essential Information" in this
Part One and "The Trust" in Part Two).
The Units being offered by this Prospectus are issued and outstanding
Units which have been purchased by the Sponsor in the secondary market or from
the Trustee after having been tendered for redemption. The profit or loss
resulting from the sale of Units will accrue to the Sponsor. No proceeds from
the sale of Units will be received by the Trust.
PUBLIC OFFERING PRICE
The Public Offering Price of the Units is equal to the aggregate
underlying value of the Securities in the portfolio of such Trust divided by
the number of Units outstanding, plus a sales charge of 4.5% of the Public
Offering Price (4.712% of the aggregate underlying value of the Securities).
See "Summary of Essential Information" in this Part One.
ESTIMATED CURRENT RETURNS
Estimated Current Returns to Unitholders under the respective
distribution plans are indicated under "Summary of Essential Information" in
this Part One. Estimated Current Returns are calculated by dividing the
Estimated Net Annual Interest Income per Unit by the Public Offering Price.
The Estimated Net Annual interest Income per Unit will vary with changes in
fees and expenses of the Trustee and the Evaluator and with the principal
prepayment, redemption, maturity, exchange or sale of underlying Securities
while the Public Offering Price will vary with changes in the bid price of the
underlying Securities; therefore, there is no assurance that the Estimated
Current Returns will be realized in the future (see "Estimated Current Return"
in Part Two).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Date of this Prospectus is April 20, 1994
Van Kampen Merritt
Page 1
<PAGE>
<TABLE>
VAN KAMPEN MERRITT UTILITY INCOME TRUST, SERIES 4
Summary of Essential Financial Information
As of March 4, 1994
Sponsor: Van Kampen Merritt Inc.
Supervisor:Van Kampen Merritt Investment
Advisory Corp. (a subsidiary of the
Sponsor)
Evaluator: American Portfolio Evaluation Services
(A division of a subsidiary of the
Sponsor)
Trustee: The Bank of New York
<CAPTION>
VUIT
<S> <C>
-------------------
General Information
Number of Units ......................................................................................... 925,393
Fractional Undivided Interest in Trust per Unit ......................................................... 1/ 925,393
Public Offering Price:
Aggregate Value of Securities in Portfolio <F1>...................................................... $ 23,432,154.16
Aggregate Value of Securities per Unit (including accumulated dividends) ............................ $ 25.63
Sales charge 3.0% (3.0928% of Aggregate Value of Securities excluding principal cash)
per Unit <F2>...................................................................................... $ .78
Principal Cash per Unit ............................................................................. $ --
Public Offering Price per Unit <F1><F2><F3>.......................................................... $ 26.41
Redemption Price per Unit ............................................................................... $ 25.63
Excess of Public Offering Price per Unit over Redemption Price per Unit ................................. $ .78
Supervisor's Annual Supervisory Fee Maximum of $0.005 per Unit
Evaluator's Annual Evaluation Fee <F6>$1,540
Evaluations for purpose of sale, purchase or redemption of Units are
made as of the close of trading on the New York Stock Exchange
(currently 4:00 P.M. New York time) next following receipt of an order
for a sale or purchase of Units or receipt by the Trustee of Units
tendered for redemption.
Mandatory Termination Date .......September 1, 1997
Minimum Termination Value ........The Trust Agreement may be terminated
if the net asset value of the Trust is less
than $3,000,000.
</TABLE>
<TABLE>
Special Information Based on Various Distribution Plans
<CAPTION>
Quarterly
<S> <C>
-------------
Calculation of Estimated Net Annual Dividends Per Unit:
Estimated Annual Dividends per Unit <F4>................................................................... $ 1.66
Less: Estimated Annual Expense per Unit ................................................................... $ .03
Estimated Net Annual Dividends per Unit ................................................................... $ 1.63
Estimated Current Return Based on Public Offering Price <F5>................................................... 6.15%
Trustee's Annual Fee .........$0.016 per Unit
Record Date ..................Fifteenth day of each month.
Distribution Date ............Last day of each month.
<FN>
<F1>Securities listed on a national securities exchange are valued at the
last closing sale price, or if no such price exists, at the mean between the
closing bid and offer prices.
<F2>Effective on each September 1, commencing September 1, 1991, the
secondary sales charge will decrease by 1/2 of 1% to a minimum sales charge of
1.5%. See "Public Offering--Offering Price".
<F3>Plus accumulated dividends.
<F4>The Estimated Annual Dividends are based on the most recent quarterly
dividend.
<F5>The Estimated Current Return is increased for transactions entitled to
a reduced sales charge. See "Public Offering--General".
<F6>Notwithstanding information to the contrary in Part Two of this
Prospectus, the Trust Indenture provides that as compensation for its
services, the Evaluator shall receive a fee of $.005 per Unit. This fee may be
adjusted for increases in consumer prices for services under the category "All
Services Less Rent of Shelter" in the Consumer Price Index.
</TABLE>
Page 2
<PAGE>
PORTFOLIO
In selecting Securities for the Trust, the following factors, among
others, were considered by the Sponsor: (a) the quality of the Securities, (b)
the yield and price of the Securities relative to other similar securities and
(c) the likelihood that earnings and dividends will continue or increase.
The Trust consists of 20 different issues of Securities, all of which are
issued by electric public utility companies and are listed on the New York
Stock Exchange.
<TABLE>
PER UNIT INFORMATION
<CAPTION>
1990<F1> 1991 1992 1993
<S> <C> <C> <C> <C>
--------------- -------------- -------------- ---------------
Net asset value per Unit at beginning of period ................ $ 20.06 $ 21.12 $ 26.05 $ 26.64
=============== ============== ============== ===============
Net asset value per Unit at end of period ...................... $ 21.12 $ 26.05 $ 26.64 $ 27.69
=============== ============== ============== ===============
Distributions to Unitholders of investment income including
accumulated dividends paid on Units redeemed (average Units
outstanding for entire
period) ...................................................... $ .12 $ 1.31 $ 1.60 $ 1.63
=============== ============== ============== ===============
Distributions to Unitholders from Security redemption proceeds
(average Units outstanding for entire
period) ...................................................... $ -- $ -- $ -- $ --
=============== ============== ============== ===============
Unrealized appreciation (depreciation) of Securities (per Unit
outstanding at end of period) ................................ $ .80 $ 4.21 $ .40 $ .74
=============== ============== ============== ===============
Units outstanding at end of period ............................. 225,000 1,047,363 1,023,221 958,126
<FN>
<F1>For the period from September 6, 1990 (initial date of deposit) through
December 31, 1990.
</TABLE>
Page 3
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Merritt Inc. and the Unitholders of
Van Kampen Merritt Utility Income Trust, Series 4:
We have audited the accompanying statement of condition (including the
analysis of net assets) and the related portfolio of Van Kampen Merritt
Utility Income Trust, Series 4 as of December 31, 1993, and the related
statements of operations and changes in net assets for the three years ended
December 31, 1993. These statements are the responsibility of the Trustee and
the Sponsor. Our responsibility is to express an opinion on such statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at December 31, 1993 by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee and
the Sponsor, as well as evaluating the overall financial statement
presentation. We believe our audit provides a reasonable basis for our
opinion.
In our opinion, the statements referred to above present fairly, in all
material respects, the financial position of Van Kampen Merritt Utility Income
Trust, Series 4 as of December 31, 1993, and the results of operations and
changes in net assets for the three years ended December 31, 1993, in
conformity with generally accepted accounting principles.
GRANT THORNTON
Chicago, Illinois
March 11, 1994
Page 4
<PAGE>
<TABLE>
VAN KAMPEN MERRITT UTILITY INCOME TRUST
SERIES 4
Statement of Condition
December 31, 1993
<CAPTION>
VUIT
<S> <C>
------------------
Trust property
Cash .................................................................................................. $ 194,923
Securities at market value, (cost $20,539,609) (note 1) ............................................... 26,243,010
Accumulated dividends ................................................................................. 87,802
------------------
$ 26,525,735
==================
Liabilities and interest of Unitholders
Interest to Unitholders ............................................................................... $ 26,525,735
------------------
$ 26,525,735
==================
</TABLE>
<TABLE>
Analysis of Net Assets
<CAPTION>
<S> <C>
Interest of Unitholders (958,126 Units of fractional undivided interest outstanding)
Cost to original investors of 1,050,000 Units (note 1) ................................................ $ 23,525,092
Less initial underwriting commission (note 3) ................................................... 1,073,220
------------------
22,451,872
Less redemption of 91,874 Units ................................................................. 2,481,405
------------------
19,970,467
Undistributed net investment income
Net investment income ........................................................................... 4,596,935
Less distributions to Unitholders ............................................................... 4,314,203
------------------
282,732
Realized gain (loss) on Security sale or redemption ................................................... 569,135
Unrealized appreciation (depreciation) of Securities (note 2) ......................................... 5,703,401
Distributions to Unitholders of Security sale or redemption proceeds .................................. --
------------------
Net asset value to Unitholders ............................................................... $ 26,525,735
==================
Net asset value per Unit (958,126 Units outstanding) ...................................................... $ 27.69
==================
</TABLE>
The accompanying notes are an integral part of this statement.
Page 5
<PAGE>
<TABLE>
VAN KAMPEN MERRITT UTILITY INCOME TRUST, SERIES 4
Statements of Operations--Years ended December 31,
<CAPTION>
1991 1992 1993
<S> <C> <C> <C>
------------------ ----------------- ------------------
Investment income
Dividend income .................................................. $ 1,299,772 $ 1,676,710 $ 1,643,043
Expenses
Trustee fees and expenses ..................................... 17,141 20,031 19,235
Evaluator fees ................................................ 3,202 926 1,540
Supervisory fees .............................................. 3,540 4,061 3,548
------------------ ----------------- ------------------
Total expenses .......................................... 23,883 25,018 24,323
------------------ ----------------- ------------------
Net Investment Income ......................................... 1,275,889 1,651,692 1,618,720
Realized gain (loss) from Security sale or redemption
Proceeds ......................................................... 64,749 608,983 1,807,666
Cost ............................................................. 57,260 431,662 1,423,341
------------------ ----------------- ------------------
Realized gain (loss) .......................................... 7,489 177,321 384,325
Net change in unrealized appreciation (depreciation)
of Securities ...................................................... 4,407,095 409,701 706,416
------------------ ----------------- ------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ............................................ $ 5,690,473 $ 2,238,714 $ 2,709,461
================== ================= ==================
</TABLE>
<TABLE>
Statements of Changes in Net Assets--Years ended December 31,
<CAPTION>
1991 1992 1993
<S> <C> <C> <C>
------------------ ----------------- ------------------
Increase (decrease) in net assets
Operations:
Net investment income ......................................... $ 1,275,889 $ 1,651,692 $ 1,618,720
Realized gain (loss) on Security sale or redemption ........... 7,489 177,321 384,325
Net change in unrealized appreciation (depreciation)
of Securities ............................................... 4,407,095 409,701 706,416
------------------ ----------------- ------------------
Net increase (decrease) in net assets resulting
from operations .......................................... 5,690,473 2,238,714 2,709,461
Distributions to Unitholders from:
Net investment income ......................................... (1,006,360) (1,655,892) (1,637,518)
Security sale or redemption proceeds .......................... -- -- --
Redemption of Units (note 4) ......................................... (64,005) (609,600) (1,807,800)
------------------ ----------------- ------------------
Total increase (decrease) .................................. 4,620,108 (26,778) (735,857)
Net asset value to Unitholders
Beginning of period ........................................... 4,752,539 27,288,370 27,261,592
Additional Securities purchased from proceeds of unit sales ...
17,915,723 -- --
------------------ ----------------- ------------------
End of period (including undistributed net investment income of
$305,730, $301,530 and $282,732, respectively) ..............
$ 27,288,370 $ 27,261,592 $ 26,525,735
================== ================= ==================
</TABLE>
The accompanying notes are an integral part of these statements.
Page 6
<PAGE>
<TABLE>
VAN KAMPEN MERRITT UTILITY INCOME TRUST
PORTFOLIO as of December 31, 1993
SERIES 4
_________________________________________________________________________________________________________________________________
<CAPTION>
December
Standard & Poor's 31, 1993
Port- Number Earnings and Market
folio of Dividend Ranking Market Value Value
Item Shares Name of Issuer (Note 2) Per Share (Note 1)
<S> <C> <C> <C> <C> <C>
- ----------- -------------- -------------------------------------------- -------------------- ---------------- -------------------
A 58,160 Allegheny Power System Incorporated A- $ 26.500 $ 1,541,240
- ---------------------------------------------------------------------------------------------------------------------------------
B 58,800 Atlantic Energy Inc. N.J. A- 21.750 1,278,900
- ---------------------------------------------------------------------------------------------------------------------------------
C 48,975 Central & Southwest Corp. A- 24.750 1,212,131
- ---------------------------------------------------------------------------------------------------------------------------------
D 57,375 Central Louisiana Electric A- 30.250 1,735,594
- ---------------------------------------------------------------------------------------------------------------------------------
E 49,965 Cincinnati Gas & Electric B 27.500 1,374,038
- ---------------------------------------------------------------------------------------------------------------------------------
F 44,430 Consolidated Edison A 32.125 1,427,314
- ---------------------------------------------------------------------------------------------------------------------------------
G 29,619 Delmarva Power & Light Co. B+ 23.625 699,749
- ---------------------------------------------------------------------------------------------------------------------------------
H 43,610 Florida Progress Corp. A- 33.625 1,466,386
- ---------------------------------------------------------------------------------------------------------------------------------
I 30,549 Iowa-Illinois Gas & Electric B+ 24.625 752,269
- ---------------------------------------------------------------------------------------------------------------------------------
J 40,929 Kansas City Power & Light Company B+ 23.000 941,367
- ---------------------------------------------------------------------------------------------------------------------------------
K 41,545 L, G & E Energy Corp. B+ 40.500 1,682,572
- ---------------------------------------------------------------------------------------------------------------------------------
L 39,785 Minnesota Power & Light A- 32.750 1,302,959
- ---------------------------------------------------------------------------------------------------------------------------------
M 48,850 Northeast Utilities B 23.750 1,160,188
- ---------------------------------------------------------------------------------------------------------------------------------
N 32,940 Northern State Power A- 43.125 1,420,538
- ---------------------------------------------------------------------------------------------------------------------------------
O 50,400 Pacificorp B+ 19.250 970,200
- ---------------------------------------------------------------------------------------------------------------------------------
P 39,291 Public Service Enterprises Group Inc. B+ 32.000 1,257,312
- ---------------------------------------------------------------------------------------------------------------------------------
Q 32,575 SCECORP A- 49.750 1,620,606
- ---------------------------------------------------------------------------------------------------------------------------------
R 58,800 SCANA Corp. A- 20.000 1,176,000
- ---------------------------------------------------------------------------------------------------------------------------------
S 39,295 Southern Company A- 44.125 1,733,892
- ---------------------------------------------------------------------------------------------------------------------------------
T 44,305 Wisconsin Public Service A 33.625 1,489,756
-------------- -------------------
890,198 $ 26,243,010
============== ===================
_________________________________________________________________________________________________________________________________
</TABLE>
The accompanying notes are an integral part of this statement.
Page 7
<PAGE>
VAN KAMPEN MERRITT UTILITY INCOME TRUST
SERIES 4
Notes to Financial Statements
December 31, 1991, 1992 and 1993
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation--Securities listed on a national securities exchange
are valued at the last closing sales price, or if no such price exists, at the
mean between the closing bid and offer price.
Security Cost--The original cost to the Trust of the Securities was
based, for Securities listed on a national securities exchange, on the closing
sale prices on the exchange, or if no such price existed, at the mean between
the last bid and offer prices, or for Securities not so listed, at the mean
between bid and offering prices on the over-the-counter market, in each case,
on the day of the various Dates of Deposit plus brokerage commissions.
Unit Valuation--The redemption price per Unit is the pro rata share of
each Unit based upon (1) the cash on hand in the Trust or monies in the
process of being collected, (2) the Securities in the Trust based on the value
as described in Note 1 and (3) accumulated dividends thereon, less accrued
expenses of the Trust, if any.
Federal Income Taxes--The Trust is not taxable for Federal income tax
purposes. Each Unitholder is considered to be the owner of a pro rata portion
of the Trust and, accordingly, no provision has been made for Federal income
taxes.
Other--The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.
NOTE 2--PORTFOLIO
Ranking--All rankings are by Standard & Poor's Corporation. The rankings
shown represent the latest published ratings of the Securities. For a brief
description of ranking symbols and their related meanings, see `Description of
Securities Ratings' in Part Two.
Unrealized Appreciation and Depreciation--An analysis of net unrealized
appreciation (depreciation) at December 31, 1993 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized Appreciation $ 5,821,888
Unrealized Depreciation (118,487)
-----------------
$ 5,703,401
=================
</TABLE>
NOTE 3--OTHER
Marketability--Although it is not obligated to do so, the Sponsor intends
to maintain a market for Units and to continuously offer to purchase Units at
prices, subject to change at any time, based upon the value of the Securities
in the portfolio of the Trust valued as described in Note 1, plus accumulated
dividends to the date of settlement. If the supply of Units exceeds demand, or
for other business reasons, the Sponsor may discontinue purchases of Units at
such prices. In the event that a market is not maintained for the Units, a
Unitholder desiring to dispose of his Units may be able to do so only by
tendering such Units to the Trustee for redemption at the redemption
price.
Cost to Investors--The cost to original investors was based on the
underlying value of the Securities per Unit on the date of an investor's
purchase, plus a sales charge of 4.5% of the public offering price which is
equivalent to 4.712% of the aggregate offering price of the Securities. The
secondary market cost to investors is based on the determination of the
underlying value of the Securities per Unit on the date of an investor's
purchase plus a sales charge of 3.5% of the public offering price which is
3.627% of the underlying value of the Securities. Effective on each September
1, commencing September 1, 1991, the secondary sales charge will decrease by
1/2 of 1% to a minimum sales charge of 1.5%.
Compensation of Evaluator and Supervisor--The Supervisor receives a fee
for providing portfolio supervisory services for the Trust ($.005 per Unit,
not to exceed the aggregate cost of the Supervisor for providing such services
to all applicable Trusts). The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio. Both fees may be adjusted for increases
under the category "All Services Less Rent of Shelter" in the Consumer Price
Index.
Page 8
<PAGE>
NOTE 4--REDEMPTION OF UNITS
During the years ended December 31, 1991, 1992 and 1993, 2,637 Units,
24,142 Units and 65,095 Units, respectively, were presented for redemption.
Page 9
VAN KAMPEN MERRITT PROSPECTUS
UTILITY INCOME TRUST PART TWO
The Trust. Van Kampen Merritt Utility Income Trust (the "Trust") is a unit
investment trust which offers investors the opportunity to purchase Units
representing proportionate interests in a fixed portfolio of equity securities
of companies diversified within the electric public utility industry. Unless
terminated earlier, the Trust will terminate on the Mandatory Termination Date
stated under "Summary of Essential Financial Information" in Part One of this
Prospectus 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.
Objectives Of The Trust. The objectives of the Trust are a high level of
dividend income and capital appreciation through investment in a fixed
portfolio of equity securities of companies diversified within the electric
public utility industry. Many of these companies have established a history of
paying regular dividends and of increasing their dividends over time. See
"Objectives and Securities Selection". There is no assurance that the Trust
will achieve its objectives.
Public Offering Price. The Public Offering Price per Unit is equal to the
aggregate underlying value of the Securities in the Trust divided by the
number of Units outstanding, plus a sales charge equal to 4.9% of the Public
Offering Price which is equivalent to 5.152% of the aggregate underlying value
of the Securities. In addition, a pro rata share of accumulated dividends, if
any, in the Income Account will be added to the Public Offering Price. The
minimum purchase is five Units (one Unit for a tax-sheltered retirement plan).
See "Public Offering".
Estimated Annual Distributions. The estimated annual dividend distributions
per unit will vary with changes in fees and expenses of the Trust, with
changes in dividends received and with the sale or liquidation of Securities;
therefore, there is no assurance that the annual dividend distribution will be
realized in the future.
Distributions. Distributions of dividends received by the Trust will be made
monthly. Distributions of funds in the Capital Account, if any, will be made
in December of each year. See "Rights of Unitholders-Distributions of Income
and Capital".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
CRIMINAL OFFENSE.
_________________________________________________________________________
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED
BY PART ONE.
Both parts of this Prospectus should be retained for future reference.
_________________________________________________________________________
Dated as of the Date of the accompanying Part I Prospectus.
VAN KAMPEN MERRITT
THE TRUST
Van Kampen Merritt Utility Income Trust (the "Trust") is a unit investment
trust created under the laws of the State of New York pursuant to a Trust
Indenture and Agreement (the "Trust Agreement"), among Van Kampen Merritt
Inc., as Sponsor, The Bank of New York as Trustee, and American Portfolio
Evaluation Services, a division of Van Kampen Merritt Investment Advisory
Corp., as Evaluator.
The Trust may be an appropriate medium for investors who desire to participate
in a portfolio of public utility equity securities with greater
diversification than they might be able to acquire individually.
Diversification of the Trust's assets will not eliminate the risk of loss
always inherent in the ownership of securities. See "Trust Portfolio".
Each Unit represents a fractional undivided interest in the Trust. To the
extent that any Units are redeemed by the Trustee, the fractional undivided
interest in the Trust represented by each unredeemed Unit will increase
accordingly, although the actual interest in the Trust represented by such
fraction will remain unchanged. Units will remain outstanding until redeemed
upon tender to the Trustee by Unitholders, which may include the Sponsor, or
until the termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The objectives of the Trust are to provide investors with a high level of
dividend income and capital appreciation. Investors should be aware that the
objectives of a high level of dividend income and capital appreciation are
likely to be contradictory; thus, the Trust's portfolio is comprised of
securities which result in a compromise between these objectives. The
portfolio of the Trust is described under "Trust Portfolio" herein and
"Portfolio" in Part One of this Prospectus. The securities deposited in the
Trust pursuant to the Trust Agreement are referred to as the "Securities". An
investor will be subjected to taxation on the dividend income received from
the Trust and on gains from the sale or liquidation of Securities (see
"Federal Taxation"). Investors should be aware that there is no guarantee that
the Trust's objectives will be achieved because they are subject to the
continuing ability of the respective Security issuers to continue 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 distributions 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 selecting Securities for the Trust, the following factors, among others,
were considered by the Sponsor: (a) the quality of the Securities, (b) the
yield and price of the Securities relative to other similar securities and (c)
the likelihood that earnings and dividends will continue or increase. In
selecting the Securities, the Sponsor has utilized, at its own expense,
certain research services Duff & Phelps Inc. and a Sister Corporation
McCarthy, Croissant and Maffei, Inc. ("MCM").
Investors should be aware that the Trust is not a "managed" trust and as a
result the adverse financial condition of a company will not result in its
elimination from the Portfolio except under extraordinary circumstances (see
"Trust Administration-Portfolio Administration"). In addition, Securities will
not be sold by the Trust to take advantage of market fluctuations or changes
in anticipated rates of appreciation. Investors should note in particular that
the securities were selected by the Sponsor as of the date the Securities were
purchased by the Trust. The Trust may continue to purchase or 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
Trust.
TRUST PORTFOLIO
The Trust consists of a number of different issues of Securities, all of which
were issued by public utility companies listed on the New York Stock Exchange.
An investment in Units of the Trust should be made with an understanding of
the characteristics of the public utility industry and the risks which such an
investment may entail. General problems of such issuers would include the
difficulty in financing large construction programs in an inflationary period,
the limitations on operations and increased costs and delays attributable to
environmental considerations, the difficulty of the capital market in
absorbing utility debt, the difficulty in obtaining fuel at reasonable prices
and the effect of energy conservation. All such issuers have been experiencing
certain of these problems in varying degrees. In addition, Federal, state and
municipal governmental authorities may from time to time review existing, and
impose additional, regulations governing the licensing, construction and
operation of nuclear power plants, which may adversely affect the ability of
the issuers of certain of the Securities in the portfolio to make dividend
payments and/or interest on such Securities.
Utilities are generally subject to extensive regulation by state utility
commissions which, for example, establish the rates which may be charged and
the appropriate rate of return on an approved asset base, which must be
approved by the state commissions. Certain utilities have had difficulty from
time to time in persuading regulators, who are subject to political pressures,
to grant rate increases necessary to maintain an adequate return on investment
and voters in many states have the ability to impose limits on rate
adjustments (for example, by initiative or referendum). Any unexpected
limitations could negatively affect the profitability of utilities whose
budgets are planned far in advance. In addition, gas pipeline and distribution
companies have had difficulties in adjusting to short and surplus energy
supplies, enforcing or being required to comply with long-term contracts and
avoiding litigation from their customers, on the one hand, or suppliers, on
the other.
Certain of the issuers of the Securities in the Trust may own or operate
nuclear generating facilities. Governmental authorities may from time to time
review existing, and impose additional, requirements governing the licensing,
construction and operation of nuclear power plants. Nuclear generating
projects in the electric utility industry have experienced substantial costs
increases, construction delays and licensing difficulties. These have been
caused by various factors, including inflation, high financing costs, required
design changes and rework, allegedly faulty construction, objections by groups
and governmental officials, limits on the ability to finance, reduced
forecasts of energy requirements and economic conditions. This experience
indicates that the risk of significant cost increases, delays and licensing
difficulties remains present through to completion and achievement of
commercial operation of any nuclear project. Also, nuclear generating units in
service have experienced unplanned outages or extensions of scheduled outages
due to equipment problems or new regulatory requirements sometimes followed by
a significant delay in obtaining regulatory approval to return to service. A
major accident at a nuclear plant anywhere, such as the accident at a plant in
Chernobyl, could cause the imposition of limits or prohibitions on the
operation, construction or licensing of nuclear units in the United States.
Other general problems of the gas, water, telephone and electric utility
industry (including state and local joint action power agencies) include
difficulty in obtaining timely and adequate rate increases, difficulty in
financing large construction programs to provide new or replacement facilities
during an inflationary period, rising costs of rail transportation to
transport fossil fuels, the uncertainty of transmission service costs for both
interstate and intrastate transactions, changes in tax laws which adversely
affect a utility's ability to operate profitably, increased competition in
service costs, recent reductions in estimates of future demand for electricity
and gas in certain areas of the country, restrictions on operations and
increased cost and delays attributable to environmental considerations,
uncertain availability and increased cost of capital, unavailability of fuel
for electric generation at reasonable prices, including the steady rise in
fuel costs and the costs associated with conversion to alternate fuel sources
such as coal, availability and cost of natural gas for resale, technical and
cost factors and other problems associated with construction, licensing,
regulation and operation of nuclear facilities for electric generation,
including among other considerations the problems associated with the use of
radioactive materials and the disposal of radioactive wastes, and the effects
of energy conservation. Each of the problems referred to could adversely
affect the ability of the issuers of any utility bonds in the Trust to make
payments due on these bonds.
In view of the pending investigations and the other uncertainties discussed
above, there can be no assurance that any company's share of the full cost of
nuclear units under construction ultimately will be recovered in rates or of
the extent to which a company could earn an adequate return on its investment
in such units. The likelihood of a significantly adverse event occurring in
any of the areas of concern described above varies, as does the potential
severity of any adverse impact. It should be recognized, however, that one or
more of such adverse events could occur and individually or collectively could
have a material adverse impact on the financial condition or the results of
operations of a company's ability to make interest and principal payments on
its outstanding debt.
The average common stock dividend yield of utilities has exceeded that of the
S&P 500 stocks by a wide amount. For example, the stocks in the Standard &
Poor's 40 Utilities Index for the year 1991 had an average yield of 5.95%,
well ahead of the 3.24% average yield for the stocks in the Standard & Poor's
500 Index. Though past performance does not guarantee future results, the
average total returns experienced by investors in utility stocks over the
15-year period ending December 31, 1991 has been superior to a wide range of
fixed income indices. For example, a $10,000.00 investment made January 1,
1977 would have a total return as of December 31, 1991 of $94,063.00 if
invested in the S&P utility stocks in comparison to a total return of
$74,152.00 if invested in the S&P 500 stocks. There can be no assurance that
the historical investment performance for any industry (including the public
utilities industry) is indicative of future performance, however, during
periods of lower interest rates, dividend yields on utility common stocks are
often attractive. In times of both economic weakness and lower interest rates,
utility stocks have outperformed most other equity issued in terms of price
and dividend stability.
The Trust consists of such of the Securities listed under "Portfolio" in Part
One of this Prospectus as may continue to be held from time to time in the
Trust together with cash held in the Income and Capital Accounts. Neither the
Sponsor nor the Trustee shall be liable in any way for any failure in any of
the Securities.
Because certain of the Securities from time to time may be sold under certain
circumstances described herein, and because the proceeds from such events will
be distributed to Unitholders and will not be reinvested, no assurance can be
given that the Trust will retain for any length of time its present size and
composition. Although the Portfolio is not managed, the Sponsor may instruct
the Trustee to sell Securities under certain limited circumstances.
Securities, however, will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation or depreciation.
An investment in Units should be made with an understanding of the risks which
an investment in common stock entails, including the risk that the financial
condition of the issuers of the Securities or the general condition of the
common stock market may worsen and the value of the Securities and therefore
the value of the Units may decline. Common stocks are especially susceptible
to general stock market movements and to volatile increases and decreases of
value as market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors including expectations
regarding government economic, monetary and fiscal policies, inflation and
interest rates, economic expansion or contraction, and global or regional
political, economic or banking crises. Shareholders of common stocks have
rights to receive payments from the issuers of those common stocks that are
generally subordinate to those of creditors of or holders of debt obligations
or preferred stocks of such issuers. Shareholders of common stocks of the type
held by the Trust have a right to receive dividends only when and if, and in
the amounts, declared by the issuer's board of directors and have a right to
participate in amounts available for distribution by the issuer only after all
other claims on the 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 are subject to market fluctuations for
as long as the common stocks remain outstanding, and thus the value of the
Securities in the Portfolio may be expected to fluctuate over the life of the
Trust to values higher or lower than those prevailing on the date stated in
the "Summary of Essential Financial Information" in Part One of this
Prospectus.
Unitholders will be unable to dispose of any of the Securities in the
Portfolio, as such, and will not be able to vote the Securities. As the holder
of the Securities, the Trustee will have the right to vote all of the voting
stocks in the Trust and will vote such stocks in accordance with the
instructions of the Sponsor. Unitholders may, however, be able upon request to
receive an "in kind" distribution of these Securities evidenced by the Units
(see "Rights of Unitholders-Redemption of Units").
FEDERAL TAXATION
United States Federal Income Taxes. The following is a general discussion of
certain of the federal income tax consequences of the purchase, ownership and
disposition of the Units. The summary is limited to investors who hold the
Units as "capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Internal Revenue Code of 1986 (the "Code").
Unitholders should consult their tax advisers in determining the federal,
state, local and any other tax consequences of the purchase, ownership and
disposition of Units in the Trust.
At the time of Closing of each Trust, Chapman and Cutler, special counsel for
the Sponsor, rendered an opinion under then existing law substantially to the
effect that:
The Trust is not an association taxable as a corporation for federal income
tax purposes.
Each Unitholder will, except as discussed below, be considered the owner of a
pro rata portion of each of the Trust assets for federal income tax purposes
under Subpart E, Subchapter J of Chapter 1 of the Code and the income of the
Trust will be treated as income of the Unitholder thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from each Trust asset when such income is received by the Trust.
Each Unitholder will have a taxable event when a Security is disposed of
(whether by sale, liquidation, redemption or otherwise) or when the Unitholder
redeems or sells his Units. The cost of the Units to a Unitholder on the date
such Units are purchased is allocated among the Securities held in the Trust
(in accordance with the proportion of the fair market values of such
Securities), subject to the adjustments discussed below, in order to determine
his tax basis for his pro rata portion in each Security.
Taxation of Dividends Received by the Trust. For federal income tax purposes,
a Unitholder's pro rata portion of dividends, as defined by Section 316 of
the Code, paid by a corporation are taxable as ordinary income to the extent
of such corporation's current and accumulated "earnings and profits." A
Unitholder's pro rata portion of dividends which exceed such current and
accumulated earnings and profits will first reduce 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 be treated as capital gain. Such capital
gain will be short-term unless a Unitholder has held his Units for more than
one year.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such
Unitholder's pro rata portion of dividends received by the Trust (to the
extent such dividends are taxable as ordinary income, as discussed above) in
the same manner as if such corporation directly owned the Securities paying
such dividends. 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). Proposed 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 corporation 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 dividend received deduction have been introduced. Accordingly,
Unitholders should consult their tax adviser in this regard.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible
by the Unitholder to the same extent as though the expense had been paid
directly by him, subject to the following limitation. 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. Temporary
regulations have been issued which require Unitholders to treat certain
expenses of the Trust as miscellaneous itemized deductions subject to the
limitation. Unitholders may be required to treat some or all of the expenses
of the Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss upon Disposition of Securities by the
Trust or Disposition of Units. A Unitholder will recognize taxable gain (or
loss) when all or part of his pro rata interest in a Security is disposed of
in a taxable transaction for an amount greater (or less) than his tax basis
therefor. Any gain recognized on a sale or exchange and any loss will, under
current law, generally be capital gain or loss. Any capital gain or loss
arising from the disposition of a Security by the Trust or the disposition of
Units by a Unitholder will be short-term capital gain or loss unless the
Unitholder has held his Units for more than one year in which case such
capital gain or loss will be long-term. For taxpayers other than corporations,
net capital gains are presently subject to a maximum stated marginal tax rate
of 28 percent. However, it should be noted that legislative proposals are
introduced from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated
rate. Because some or all capital gains are taxed at a comparatively lower
rate under the Tax Act, the Tax Act includes a provision that recharacterizes
capital gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult
with their tax advisers regarding the potential effect of this provision on
their investment in Units.
If the Unitholder disposes of a Unit, he is deemed thereby to have disposed of
his entire pro rata interest in all Trust assets including his pro rata
portion of all of the Securities represented by the Unit.
Special Tax Consequences of In Kind Distributions upon Redemption of Units.
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 Securities upon the redemption of Units. As previously
discussed, prior to the redemption of Units, a Unitholder is considered as
owning a pro rata portion of each of the Trust assets for federal income tax
purposes. The receipt of an In Kind Distribution upon the redemption of Units
would be deemed an exchange of such redeeming Unitholder's pro rata portion
of each of the shares of stock and other assets held by the Trust in exchange
for an undivided interest in whole shares of stock and possibly cash.
There are generally three different potential tax consequences which may
occur under an In Kind Distribution with respect to each Security owned by the
Trust. A "Security" for this purpose is a particular class of stock issued by
a particular corporation. If the Unitholder receives only whole shares of a
Security in exchange for his or her pro rata portion in each share of such
Security held by the Trust, there is no taxable gain or loss recognized upon
such deemed exchange pursuant to Section 1036 of the Code. If the Unitholder
receives whole shares of a particular Security plus cash in lieu of a
fractional share of such Security, and if the fair market value of the
Unitholder's pro rata portion of the shares of such Security exceeds his tax
basis in his pro rata portion of such Security, taxable gain would be
recognized in an amount not to exceed the amount of such cash received,
pursuant to Section 1031(b) of the Code. No taxable loss would be recognized
upon such an exchange pursuant to Section 1031(c) of the Code, whether or not
cash is received in lieu of a fractional share. Under either of these
circumstances, special rules will be applied under Section 1031(d) of the Code
to determine the Unitholder's tax basis in the shares of such particular
Security which he receives as part of the In Kind Distribution. Finally, if a
Unitholder's pro rata interest in a Security does not equal a whole share he
may receive entirely cash in exchange for his pro rata portion of a particular
Security. In such case, taxable gain or loss is measured by comparing the
amount of cash received by the Unitholder with his tax basis in such Security.
Because the Trust will own many Securities, a Unitholder who requests an In
Kind Distribution will have to analyze the tax consequences with respect to
each Security owned by the Trust. However, a Unitholder must elect to have his
Units redeemed entirely in kind plus cash for fractional shares or entirely
for cash. The amount of taxable gain (or loss) recognized upon such redemption
will generally equal the sum of the gain (or loss) recognized under the rules
described above by the redeeming Unitholder with respect to each Security
owned by the Trust. Redeeming Unitholders who request an In Kind Distribution
are advised to consult their tax advisers in this regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder for
his Units. The cost of the Units is allocated among the Securities held in the
Trust in accordance with the proportion of the fair market values of such
Securities on the date the Units are purchased in order to determine such
Unitholder's tax basis for his pro rata portion of each Security.
The redemption of a Unitholder's Units in a Trust for cash would result in
each of the remaining Unitholders of the Trust owning a greater proportionate
interest in the remaining assets of the Trust. Although present law does not
directly address this matter, it would appear reasonable that a remaining
Unitholder's tax basis in his Units would be increased by his pro rata
portion of any proceeds received by the Trust on the sale of Securities which
were not distributed to him but were instead used by the Trust to redeem Units
and that his tax basis in the assets of the Trust would be similarly
increased, based on the relative fair market value of the remaining assets of
the Trust as of the date of such redemption.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary
income as described above.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the
Unitholder has not been notified that payments to the Unitholder are subject
to back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions by
the Trust to such Unitholder (including amounts received upon the redemption
of Units) will be subject to back-up withholding. Distributions by the Trust
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.
At the time of closing of each Trust, special counsel to the Trust for New
York tax matters rendered an opinion substantially to the effect that the
Trust is not an association taxable as a corporation and the income of the
Trust will be treated as the income of the Unitholders under the existing
income tax laws of the State and City of New York.
The foregoing discussion relates only to United States federal and New York
State and City income taxes; Unitholders may be subject to state and local
taxation in other jurisdictions. Unitholders should consult their tax advisers
regarding potential state or local taxation with respect to the Units.
TRUST OPERATING EXPENSES
Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trust. However, Van Kampen
Merritt Investment Advisory Corp., which is a wholly owned subsidiary of the
Sponsor, will receive an annual supervisory fee, which is not to exceed the
amount set forth under "Summary of Essential Financial Information" in Part
One of this Prospectus, for providing portfolio supervisory services for the
Trust. Such fee (which is based on the number of Units outstanding on January
1 of each year) may exceed the actual costs of providing such supervisory
services for this Trust, but at no time will the total amount received for
portfolio supervisory services rendered to this Series and other unit
investment trusts sponsored by the Sponsor for which it provides such
supervisory services in any calendar year exceed the aggregate cost to the
Supervisor of supplying such services in such year. In addition, the
Evaluator, which is a division of Van Kampen Merritt Investment Advisory
Corp., shall receive as an annual evaluation fee for regularly evaluating the
Trust's portfolio that amount set forth under "Summary of Essential Financial
Information" in Part One of this Prospectus (which is based on the outstanding
number of Units on January 1 of each year). Both of the foregoing fees may be
increased without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of Shelter"
in the Consumer Price Index published by the United States Department of Labor
or, if such category is no longer published, in a comparable category. The
Sponsor and dealers will receive sales commissions and may realize other
profits (or losses) in connection with the sale of Units as described under
"Public Offering-Sponsor and Dealer Compensation".
Trustee's Fee. For its services the Trustee will receive as an annual fee
from the Trust that amount set forth under "Summary of Essential Information"
in Part One of this Prospectus (which is based on the outstanding number of
units on January 1 of each year). The Trustee's fees are payable monthly on
or before the fifteenth day of each month from the Income Account to the
extent funds are available and then from the Capital Account. The Trustee
benefits to the extent there are funds for future distributions, payment of
expenses and redemptions in the Capital and Income Accounts since these
accounts are non-interest bearing and the amounts earned by the Trustee are
retained by the Trustee. Part of the Trustee's compensation for its services
to the Trust is expected to result from the use of these funds. Such fees may
be increased without approval of the Unitholders by amounts not exceeding
proportionate increases under the category "All Services Less Rent of Shelter"
in the Consumer Price Index published by the United States Department of Labor
or, if such category is no longer published, in a comparable category. For a
discussion of the services rendered by the Trustee pursuant to its obligations
under the Trust Agreement, see "Rights of Unitholders-Reports Provided" and
"Trust Administration".
Miscellaneous Expenses. The following additional charges are or may be
incurred by the Trust: (a) normal expenses (including the cost of mailing
reports to Unitholders) incurred in connection with the operation of the
Trust, (b) fees of the Trustee for extraordinary services, (c) expenses of the
Trustee (including legal and auditing expenses) and of counsel designated by
the Sponsor, (d) various governmental charges, (e) expenses and costs of any
action taken by the Trustee to protect the Trust and the rights and interests
of Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of the Trust without negligence, bad
faith or wilful misconduct on its part and (g) expenditures incurred in
contacting Unitholders upon termination of the Trust.
The fees and expenses set forth herein are payable out of the Trust. When such
fees and expenses are paid by or owning to the Trustee, they are secured by a
lien on the portfolio of the Trust. Since the Securities are all common
stocks, and the income stream produced by dividend payments is unpredictable,
the Sponsor cannot provide any assurance that dividends will be sufficient to
meet any or all expenses of the Trust. If the balances in the Income and
Capital Accounts are insufficient to provide for amounts payable by the Trust,
the Trustee has the power to sell Securities to pay such amounts. These sales
may result in capital gains or losses to Unitholders. See "Federal Taxation".
PUBLIC OFFERING
General. Units are offered at the Public Offering Price (which is based on
the aggregate underlying value of the Securities in the Trust and includes a
sales charge of 4.9% of the Public Offering Price-which charge is equivalent
to 5.152% of the aggregate underlying value of the Securities) plus a pro rata
share of any accumulated dividends in the Income Account. Such underlying
value shall include the proportionate share of any undistributed cash held in
the Capital Account.
Employees of Van Kampen Merritt Inc. and its subsidiaries may purchase
Units of the Trust at the current Public Offering Price less the dealer's
concession described below in "Public Offering-Unit Distribution".
The Trustee has no cash for distribution to Unitholders until it receives
dividend payments on the Securities in the Trust. The Trustee is authorized to
provide its own funds, at times, in order to advance income distributions. The
Trustee will recover these advancements when such dividend income is received.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in Part One
of this Prospectus in accordance with fluctuations in the prices of the
underlying Securities in the Trust.
The price of the Units as of the opening of business on the date therein
stated in the "Summary of Essential Financial Information" in Part One of this
Prospectus was established by adding to the determination of the aggregate
underlying value of the Securities an amount equal to 5.152% of such value and
dividing the sum so obtained by the number of Units outstanding. Such
underlying value shall include the proportionate share of any cash held in the
Capital Account. This computation produced a gross sales commission equal to
4.9% of the Public Offering Price. The Evaluator will appraise or cause to be
appraised daily the value of the underlying Securities as of 4:00 P.M. Eastern
time on days the New York Stock Exchange is open for business 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 at or prior to
the close of trading on the New York Stock Exchange on each such day. Orders
received by the Trustee, Sponsor or any Underwriter for purchases, sales or
redemptions after that time, or on a day when the New York Stock Exchange is
closed, will be held until the next determination of price. Such sales charge
will be reduced over time, as set forth in "Summary of Essential Financial
Information" in Part One of this Prospectus, to a minimum sales charge of
1.5%.
The value of the Securities is determined on each business day by the
Evaluator based on the closing sale prices on the day the valuation is made
for Securities listed on a national stock exchange or, if no such price
exists, at the mean between bid and offering prices on the day the valuation
is made. For Securities not so listed or, if so listed and the principal
market to the Securities is other than such exchange, or if in either case
such prices are unavailable, the valuation will be made based on the mean
between the current bid and offer prices on the over-the- counter market or by
taking into account the same factors referred to under "Rights of
Unitholders-Redemption of Units".
Unit Distribution. 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.
Broker-dealers or others will be allowed a concession or agency commission in
connection with the distribution of Units as shown in the table below:
Aggregate Number of Dealer Concession or
Units Purchased Agency Commission
per Unit
0-2,449 Units 3.00%
2,500-4,999 Units 3.00%
5,000-12,4999 Units 3.00%
12,500-24,999 Units 3.00%
25,000-49,999 Units 3.00%
50,000 or more Units 3.25%
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge (equal to the
agency commission referred to above) is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Trust
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have not indicated that these particular agency
transactions are not permitted under such Act.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of five Units (one Unit for a
tax-sheltered retirement plan). The Sponsor reserves the right to reject, in
whole or in part, any order for the purchase of Units and to change the amount
of the concession or agency commission to dealers and others from time to
time.
Sponsor and Dealer Compensation. The Sponsor and dealers will receive the
gross sales commission as described under "Public Offering-General" above.
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 intends to, and certain
dealers maintain a secondary market for Units of the Trust. In so maintaining
a market, the Sponsor and any such dealers 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 a sales charge of 4.5%). In addition, the Sponsor and any such
dealers 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 they are not obligated to do so, the Sponsor intends
to, and certain of the other Underwriters may, maintain a market for the Units
offered hereby and offer continuously to purchase Units. If the supply of
Units exceeds demand or if some other business reason warrants it, the Sponsor
and/or Underwriters 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 may be able to dispose of such
Units only by tendering them to the Trustee for redemption at the Redemption
Price. See "Rights of Unitholders-Redemption of Units". A Unitholder who
wishes to dispose of his Units should inquire of his broker as to current
market prices in order to determine whether there is in existence any price in
excess of the Redemption Price and, if so, the amount thereof.
Tax-Sheltered Retirement Plans. Units of the Trust are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for individuals, Simplified Employee Pension
Plans for employees, qualified plans for self- employed individuals, and
qualified corporate pension and profit sharing plans for employees. The
purchase of Units of the Trust may be limited by the plans' provisions and
does not itself establish such plans. The minimum purchase in connection with
a tax-sheltered retirement plan is one Unit with respect to Series 1 and
Series 2 and 50 Units with respect to Series 3 and subsequent Series.
RIGHTS OF UNITHOLDERS
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trust is evidenced by separate registered
certificates executed by the Trustee and the Sponsor. Certificates are
transferable by presentation and surrender to the Trustee properly endorsed or
accompanied by a written instrument or instruments of transfer. A Unitholder
must sign exactly as his name appears on the face of the certificate with the
signature guaranteed by an officer of a commercial bank or trust company, a
member firm of either the New York, American, Midwest or Pacific Stock
Exchange, or in such other manner as may be acceptable to 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 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. Income received by the Trust is credited
by the Trustee to the Income Account. Other receipts are credited to the
Capital Account. Income received by the Trust will be distributed on or
shortly after the last day of each month on a pro rata basis to Unitholders of
record as of the preceding record date (which will be the fifteenth day of the
month). All distributions will be net of applicable expenses. In addition,
amounts from the Capital Account, if any, will be distributed at least
annually in December to the Unitholders then of record. Proceeds received from
the disposition of any of the Securities after a record date and prior to the
following distribution date will be held in the Capital Account and not
distributed until the next distribution date applicable to such Capital
Account. The Trustee shall not be required to make a distribution from the
Capital Account unless the cash balance on deposit therein available for
distribution shall be sufficient to distribute at least $1.00 per 50 Units.
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 the Unitholders as of each record date will be made on
the following distribution date or shortly thereafter and shall consist of an
amount substantially equal to such portion of the Unitholders' pro rata share
of the estimated annual dividend distributions in the Income Account after
deducting estimated expenses. Because dividends are not received by the Trust
at a constant rate throughout the year, such distributions to Unitholders may
be more or less than the amount credited to the Income Account as of the
record date. For the purpose of minimizing fluctuation in the distributions
from the Income Account, the Trustee is authorized to advance such amounts as
may be necessary to provide income distributions of approximately equal
amounts. The Trustee shall be reimbursed, without interest, for any such
advances from funds in the Income Account on the ensuing record date. Persons
who purchase Units will commence receiving distributions only after such
person becomes a record owner. Notification to the Trustee of the transfer of
Units is the responsibility of the purchaser, but in the normal course of
business such notice is provided by the selling broker-dealer.
As of the fifteenth day of each month, the Trustee will deduct from the Income
Account and, to the extent funds are not sufficient therein, from the Capital
Account amounts necessary to pay the expenses of the Trust (as determined on
the basis set forth under "Trust Operating Expenses"). The Trustee also may
withdraw from said accounts such amounts, if any, as it deems necessary to
establish a reserve for any governmental charges payable out of the Trust.
Amounts so withdrawn shall not be considered a part of the Trust's assets
until such time as the Trustee shall return all or any part of such amounts to
the appropriate accounts. In addition, the Trustee may withdraw from the
Income and Capital Accounts such amounts as may be necessary to cover
redemptions of Units.
Reinvestment Option. Unitholders of the Trust may elect to have each
distribution of income, capital gains and/or capital on their Units
automatically reinvested in shares of any of the open ended mutual funds
(except for B shares) listed under "Trust Administration-Sponsor". 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 Trust. 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 Merritt Inc.
at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. Texas residents who
desire to reinvest may request that a broker-dealer registered in Texas send
the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
income, capital gains and/or capital on the participant's Units will, on the
applicable distribution date, automatically be applied, as directed by such
person, as of such distribution date by the Trustee to purchase shares (or
fractions thereof) of the applicable Reinvestment Fund at a net asset value as
computed as of the close of trading on the New York Stock Exchange on such
date, plus a sales charge of $1.00 per $100 of reinvestment, except if the
participant selects the Van Kampen Merritt Money Market Fund or the Van Kampen
Merritt Tax Free Money Fund in which case no sales charge applies. A minimum
of one-half of such sales charge would be paid to Van Kampen Merritt Inc.
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. Each Reinvestment Fund, its sponsor and its investment adviser
shall have the right to terminate at any time the reinvestment plan relating
to such fund.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being
distributed, expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. For as long as the Trustee deems it to be
in the best interest of the Unitholders, the accounts of the Trust shall be
audited, not less frequently than annually, by independent certified public
accountants, and the report of such accountants shall be furnished by the
Trustee to Unitholders upon request. 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 a statement (i)
as to the Income Account: income received, deductions for applicable taxes and
for fees and expenses of the Trust, for redemptions of Units, if any, and the
balance remaining after such distributions and deductions, expressed in each
case both as a total dollar amount and as a dollar amount representing the pro
rata share of each Unit outstanding on the last business day of such calendar
year; (ii) as to the Capital Account: the dates of disposition of any
Securities (other than pursuant to In Kind Distributions) and the net proceeds
received therefrom, the results of In Kind Distributions in connection with
redemptions of Units, if any, deductions for payment of applicable taxes and
fees and expenses of the Trust held for distribution to Unitholders of record
as of a date prior to the determination and the balance remaining after such
distributions and deductions expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (iii) a list of the Securities held
and the number of Units outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit based upon the last computation
thereof made during such calendar year; and (v) amounts actually distributed
during such calendar year from the Income and Capital Accounts, separately
stated, expressed both as total dollar amounts and as dollar amounts
representing the pro rata share of each Unit outstanding.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286 of the certificates representing
the Units to be redeemed, duly endorsed or accompanied by proper instruments
of transfer with signature guaranteed (or by providing satisfactory indemnity,
as in connection with lost, stolen or destroyed certificates) and by payment
of applicable governmental charges, if any. Thus, redemption of Units cannot
be effected until certificates representing such Units have been delivered to
the person seeking redemption or satisfactory indemnity provided. No
redemption fee will be charged. On the seventh calendar day following such
tender, or if the seventh calendar day is not a business day, on the first
business day prior thereto, the Unitholder will be entitled to receive in cash
(unless the redeeming Unitholder elects an In Kind Distribution as indicated
below) an amount for each Unit equal to the Redemption Price per Unit next
computed after receipt by the Trustee of such tender of Units. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that as regards Units received after 4:00 P.M. Eastern time on days of
trading on the New York Stock Exchange, the date of tender is the next day on
which such Exchange is open for trading and such Units will be deemed to have
been tendered to the Trustee on such day for redemption at the redemption
price computed on that day.
The Trustee is empowered to sell Securities in order to make funds available
for redemption if funds are not otherwise available in the Capital and Income
Accounts to meet redemptions. The Securities to be sold will be selected by
the Trustee from those designated on a current list provided by the portfolio
supervisor for this purpose. Units so redeemed shall be cancelled.
Unitholders tendering 25 Units or more for redemption with respect to
Series 1 and Series 2 and 1,250 Units or more for redemption with respect to
Series 3 and subsequent series may request from the Trustee in lieu of a cash
redemption a distribution in kind ("In Kind Distribution") of an amount and
value of Securities per Unit equal to the Redemption Price per Unit as
determined as of the evaluation next following the tender. An In Kind
Distribution on redemption of Units will be made by the Trustee through the
distribution of each of the Securities in book- entry form to the account of
the Unitholder's bank or broker-dealer at Depository Trust Company. The
tendering Unitholder will receive his pro rata number of whole shares of each
of the Securities comprising the portfolio and cash from the Capital Account
equal to the fractional shares to which the tendering Unitholder is entitled.
In implementing these redemption procedures, the Trustee shall make any
adjustments necessary to reflect differences between the Redemption Price of
the Securities distributed in kind as of 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 the
Trust will be, and the diversity of the Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result
in lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the Portfolio at the time of
redemption. Special federal income tax consequences will result if a
Unitholder requests an In Kind Distribution. See "Federal Taxation".
The Redemption Price per Unit will be determined on the basis of the
aggregate underlying value of the Securities in the Trust. While the Trustee
has the power to determine the Redemption Price per Unit when Units are
tendered for redemption, such authority has been delegated to the Evaluator
which determines the price per Unit on a daily basis. The Redemption Price per
Unit is the pro rata share of each Unit in the Trust determined on the basis
of (i) the cash on hand in the Trust or monies in the process of being
collected and (ii) the value of the Securities in the Trust, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
any amount owing to the Trustee for its advances and (c) the accrued expenses
of the Trust. The Evaluator may determine the value of the Securities in the
Trust in the following manner: if the Securities are listed on a national
securities exchange, the evaluation will generally be based on the closing
sale price on the exchange (unless the Evaluator deems the price inappropriate
as a basis for evaluation) or, if there is no closing sale price on the
exchange, at the mean between the closing bid and offer prices. If the
Securities are not so listed or, if so listed and the principal market for the
Securities is other than on the exchange, the evaluation will generally be
made by the Evaluator in good faith based on the mean between current bid and
offer prices on the over-the-counter market (unless the Evaluator deems these
prices inappropriate as a basis for evaluation) or, if bid and offer prices
are not available, (1) on the basis of the mean between current bid and offer
prices for comparable securities, (2) by the Evaluator's appraising the value
of the Securities in good faith at the mean between the bid side and the offer
side of the market or (3) by any combination thereof. See "Public
Offering-Offering Price".
As stated above, the Trustee may sell Securities to cover redemptions. When
Securities are sold, the size of the Trust will be, and the diversity of the
Trust may be, reduced. Such sales may be required at a time when Securities
would not otherwise be sold and might result in lower prices than might
otherwise be realized.
The right of redemption may be suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities in the Trust is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
Sponsor Purchases of Units. The Trustee shall notify the Sponsor of any
tender of Units 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 second
succeeding business day and by making payment therefor to the Unitholder not
later than the date 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 Sponsor may direct the Trustee to dispose of
Securities (1) upon default in payment of amounts due on debt obligations of
the issuer of the Securities, (2) upon a decline in price or the occurrence of
other market or credit factors that in the opinion of the Sponsor would make
the retention of such Securities in the Trust detrimental to the interest of
the Unitholders or (3) to prevent the Trust from becoming subject to the
provisions of the Public Utility Holding Company Act of 1935 and rules and
regulations promulgated thereunder.
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, provided, however, that the Trust Agreement
may not be amended to increase the number of Units. 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 of 51% of
the Units then outstanding, provided that no such amendment or waiver will
reduce the interest in the Trust of any Unitholder without the consent of such
Unitholder or reduce the percentage of Units required to consent to any such
amendment or waiver without the consent of all Unitholders. The Trustee shall
advise the Unitholders of any amendment promptly after execution thereof.
The Trust may be liquidated at any time by consent of Unitholders representing
51% of the Units then outstanding or by the Trustee when the value of the
Trust, as shown by any evaluation, is less than that indicated under "Summary
of Essential Financial Information" in Part One of this Prospectus. The Trust
Agreement will terminate upon the sale or other disposition of the last
Security held thereunder, but in no event will it continue beyond the
Mandatory Termination Date stated under "Summary of Essential Financial
Information" in Part One of this Prospectus.
Written notice of any termination specifying the time or times at which
Unitholders may surrender their certificates for cancellation shall be given
by the Trustee to each Unitholder at his address appearing on the registration
books of the Trust maintained by the Trustee. If the Trust will terminate on
the Mandatory Termination Date, the Trustee will provide written notice
thereof to all Unitholders at least 30 days before such Mandatory Termination
Date and will include with such notice a form to enable eligible Unitholders
to request an In Kind Distribution rather than payment in cash upon the
termination of the Trust. To be effective, this request must be returned to
the Trustee at least five business days prior to the Mandatory Termination
Date. On the Mandatory Termination Date (or on the next business day
thereafter if a holiday) the Trustee will deliver each requesting
Unitholder's pro rata number of whole shares of each of the Securities in the
portfolio to the account of the broker- dealer or bank designated by the
Unitholder at Depository Trust Company. The value of the Unitholder's
fractional shares will be paid in cash. Unitholders not eligible to, or not
electing to, request an In Kind Distribution 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 Trust any accrued costs, expenses,
advances or indemnities provided by the Trust Agreement, including estimated
compensation of the Trustee and costs of liquidation and any amounts required
as a reserve to provide for payment of any applicable taxes or other
governmental charges. Any sale of Securities in the Trust upon termination may
result in a lower amount than might otherwise be realized if such sale were
not required at such time. The Trustee will then distribute to each Unitholder
his pro rata share of the balance of the
Income and Capital Accounts.
The Sponsor currently intends to, but is not obligated to, offer for sale
units of a subsequent series of Van Kampen Merritt Utility Income Trust on the
Mandatory Termination Date for the Trust stated under "Summary of Essential
Information" in Part One of this Prospectus. If the Sponsor is in fact
offering such units for sale, Unitholders of the Trust will be given an
opportunity to purchase such units at a public offering price which includes a
special reduced sales charge. There is, however, no assurance that units of
any new series of Van Kampen Merritt Utility Income Trust will be offered for
sale at the time, or if offered, that there will be sufficient units available
for sale to meet the requests of any or all Unitholders.
With such distribution to the Unitholders will be furnished a final
distribution statement, in substantially the same form as the annual
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 negligence (gross negligence in the case of
the Sponsor) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee
of any of the Securities. In the event of the failure of the Sponsor to act
under the Trust Agreement, the Trustee may act thereunder and shall not be
liable for any action taken by it in good faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of the
Trust which the Trustee may be required to pay under any present or future law
of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. This provision shall
not protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Sponsor. Van Kampen Merritt Inc., a Delaware corporation, is the Sponsor of
the Trust. Van Kampen Merritt Inc. is primarily owned by Clayton, Dubilier &
Rice, Inc., a New York-based private investment firm. Van Kampen Merritt Inc.
management owns a significant minority equity position. Van Kampen Merritt
Inc. specializes in the underwriting and distribution of unit investment
trusts and mutual funds. The Sponsor is a member of the National Association
of Securities Dealers, Inc. and has its principal office at One Parkview
Plaza, Oakbrook Terrace, lllinois 60181 (708-684-6000). It maintains a branch
office in Philadelphia and has regional representatives in Atlanta, Dallas,
Los Angeles, New York, San Francisco, Seattle and Tampa. As of September 30,
1993, the total stockholders' equity of Van Kampen Merritt Inc. was
$200,885,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Trusts. 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 November 30, 1993, the Sponsor and its affiliates managed or supervised
approximately $38.5 billion of investment products, of which over $25 billion
is invested in municipal securities. The Sponsor and its affiliates managed
$23 billion of assets, consisting of $8.2 billion for 19 mutual funds, $8.3
billion for 33 closed-end funds and $6.5 billion for 51 institutional
accounts. The Sponsor has also deposited over $23.5 billion of unit investment
trusts. 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 Municipal Income Trust or the IM-IT trust.
The Sponsor also provides surveillance and evaluation services at cost for
approximately $15.5 billion of unit investment trust assets outstanding. Since
1976, the Sponsor has opened over one million retail investor accounts through
retail distribution firms. Van Kampen Merritt Inc. is the sponsor of the
various series of the trusts listed below and the distributor of the mutual
funds and closed-end funds listed below. Unitholders may only invest in the
trusts, mutual funds and closed-end funds which are registered for sale in the
state of residence of such Unitholder.
Van Kampen Merritt Inc. is the sponsor of the various series of the following
unit investment trusts: Investors' Quality Tax-Exempt Trust; Investors'
Quality Tax-Exempt Trust, Multi-Series; Insured Municipals Income Trust;
Insured Municipals Income Trust, Insured Multi-Series; California Insured
Municipals Income Trust; New York Insured Municipals Income Trust;
Pennsylvania Insured Municipals Income Trust; Insured Tax Free Bond Trust;
Insured Tax Free Bond Trust, Insured Multi-Series; Investors' Quality
Municipals Trust, AMT Series; Van Kampen Merritt Blue Chip Opportunity Trust;
Van Kampen Merritt Blue Chip Opportunity and Treasury Trust; Investors'
Corporate Income Trust; Investors' Governmental Securities-Income Trust; Van
Kampen Merritt International Bond Income Trust; Van Kampen Merritt Utility
Income Trust; Van Kampen Merritt Insured Income Trust; Van Kampen Merritt
Emerging Markets Income Trust; Van Kampen Merritt Global Telecommunications
Trust; and Van Kampen Merritt Global Energy Trust.
Van Kampen Merritt Inc. is the distributor of the following mutual funds: Van
Kampen Merritt U.S.Government Fund; Van Kampen Merritt California Insured Tax
Free Fund; Van Kampen Merritt Tax-Free High Income Fund; Van Kampen Merritt
Insured Tax-Free Income Fund; Van Kampen Merritt High Yield Fund; Van Kampen
Merritt Growth and Income Fund; Van Kampen Merritt Pennsylvania Tax-Free
Income Fund; Van Kampen Merritt Money Market Fund; Van Kampen Merritt Tax Free
Money Fund; Van Kampen Merritt Municipal Income Fund; Van Kampen Merritt
Adjustable Rate U.S. Government Fund; Van Kampen Merritt Short-Term Global
Income Fund; and Van Kampen Merritt Limited Term Municipal Income Fund.
Van Kampen Merritt is the distributor of the following closed-end funds: Van
Kampen Merritt Municipal Income Trust; Van Kampen Merritt California Municipal
Trust; Van Kampen Merritt Intermediate Term High Income Trust; Van Kampen
Merritt Limited Term High Income Trust; Van Kampen Merritt Prime Rate Income
Trust; Van Kampen Merritt Investment Grade Municipal Trust; Van Kampen Merritt
Municipal Trust; Van Kampen Merritt California Quality Municipal Trust; Van
Kampen Merritt Florida Quality Municipal Trust; Van Kampen Merritt New York
Quality Municipal Trust; Van Kampen Merritt Ohio Quality Municipal Trust; Van
Kampen Merritt Pennsylvania Quality Municipal Trust; Van Kampen Merritt Trust
for Investment Grade Municipals; Van Kampen Merritt Trust for Investment Grade
CA Municipals; Van Kampen Merritt Trust for Insured Municipals; Van Kampen
Merritt Trust for Investment Grade FL Municipals; Van Kampen Merritt Trust for
Investment Grade PA Municipals; Van Kampen Merritt Advantage Pennsylvania
Municipal Income Trust; Van Kampen Merritt Advantage Municipal Income Trust;
Van Kampen Merritt Municipal Opportunity Trust; Van Kampen Merritt Trust for
Investment Grade NY Municipals; Van Kampen Merritt Trust for Investment Grade
NJ Municipals; Van Kampen Merritt Strategic Sector Municipal Trust; Van Kampen
Merritt Value Municipal Income Trust; Van Kampen Merritt California Value
Municipal Income Trust; Van Kampen Merritt Massachusetts Value Municipal
Income Trust; Van Kampen Merritt New Jersey Value Municipal Income Trust; Van
Kampen Merritt New York Value Municipal Income Trust; Van Kampen Merritt Ohio
Value Municipal Income Trust; Van Kampen Merritt Pennsylvania Value Municipal
Income Trust; Van Kampen Merritt Municipal Opportunity Trust II; Van Kampen
Merritt Florida Municipal Opportunity Trust; Van Kampen Merritt Advantage
Municipal Income Trust II; and Van Kampen Merritt Select Municipal Trust.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or 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 Fund as provided therein
or (iii) continue to act as Trustee without terminating the Trust Agreement.
All costs and expenses incurred in creating and establishing the Fund,
including the cost of the initial preparation, printing and execution of the
Trust Agreement and the certificates, legal and accounting expenses,
advertising and selling expenses, expenses of the Trustee, initial evaluation
fees and other out-of-pocket expenses have been borne by the Sponsor at no
cost to the Fund.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286 (800) 221-7668. The Bank of New York is
subject to supervision and examination by the Superintendent of the Banks of
the State of New York and the Board of Governors of the Federal Reserve
System, and its deposits are insured by the Federal Deposit Insurance
Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the certificates issued by
the Trust to, every Unitholder of the Trust. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute,
rule or regulation (see "Rights of Unitholders-Reports Provided"). The Trustee
is required to keep a certified copy or duplicate original of the Trust
Agreement on file in its office available for inspection at all reasonable
times during the usual business hours by any Unitholder, together with a
current list of the Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of the trust 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. Various counsel have acted as counsel for the
Trustee.
Independent Certified Public Accountants. The statement of condition and the
related securities portfolio included in Part One of this Prospectus have been
audited by Grant Thornton, independent certified public accountants, as set
forth in their report in Part One of this Prospectus, and are included herein
in reliance upon the authority of said firm as experts in accounting and
auditing.
DESCRIPTION OF EARNINGS AND DIVIDEND RANKINGS
As published by Standard & Poor's Corporation.
The investment process involves assessment of various factors-such as product
and industry position, corporate resources and financial policy-with results
that make some common stocks more highly esteemed than others. In this
assessment, Standard & Poor's believes that earnings and dividend performance
is the end result of the interplay of these factors and that, over the long
run, the record of this performance has a considerable bearing on relative
quality. The rankings, however, do not pretend to reflect all of the factors,
tangible or intangible, that bear on stock quality.
Relative quality of bonds or other debt, that is, degrees of protection for
principal and interest, called creditworthiness, cannot be applied to common
stocks, and therefore rankings are not to be confused with bond quality
ratings which are arrived at by a necessarily different approach.
Growth and stability of earnings and dividends are deemed key elements in
establishing Standard & Poor's earnings and dividend rankings for common
stocks, which are designed to capsulize the nature of this record in a single
symbol. It should be noted, however, that the process also takes into
consideration certain adjustments and modifications deemed desirable in
establishing such rankings.
The point of departure in arriving at these rankings is a computerized
scoring system based on per-share earnings and dividend records of the most
recent ten years-a period deemed long enough to measure significant time
segments of secular growth, to capture indications of basic change in trends
as they develop, and to encompass the full peak-to-peak range of the business
cycle. Basis scores are computed for earnings and dividends, then adjusted as
indicated by a set of predetermined modifiers for growth, stability within
long-term trends, and cyclicality. Adjusted scores for earnings and dividends
are then combined to yield a final score.
Further, the ranking system makes allowance for the fact that, in general,
corporate size imparts certain recognized advantages from an investment
standpoint. Conversely, minimum size limits (in terms of corporate sales
volume) are set for the various rankings, but the system provides for making
exceptions where the score reflects an outstanding earnings-dividend record.
The final score for each stock is measured against a scoring matrix
determined by analysis of the scores of a large and representative sample of
stocks. The range of scores in the array of this sample has been aligned with
the following ladder of rankings:
A+ Highest B+ Average C Lowest
A High B Below Average D In Reorganization
A- Above Average B- Lower
The positions as determined above may be modified in some instances by special
considerations, such as natural disasters, massive strikes, and non-recurring
accounting adjustments.
A ranking is not a forecast of future market price performance, but is
basically an appraisal of past performance of earnings and dividends, and
relative current standing. These rankings must not be used as market
recommendations; a high-score stock may at times be so overpriced as to
justify its sale, while a low-score stock may be attractively priced for
purchase. Rankings based upon earnings and dividend records are no substitute
for complete analysis. They cannot take into account potential effects of
management changes, internal company policies not yet fully reflected in the
earnings and dividend record, public relations standing, recent competitive
shifts, and a host of other factors that may be relevant to investment status
and decision.
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 Trust, the Sponsor or dealers. This Prospectus does not
constitute an offer to sell, or a solicitation of any offer to buy, securities
in any state to any persons to whom it is not lawful to make such offer in
such state.
TABLE OF CONTENTS
Title Page
The Trust 2
Objectives and Securities Selection 2
Trust Portfolio 3
Federal Taxation 5
Trust Operating Expenses 7
Public Offering 8
Rights of Unitholders 10
Trust Administration 13
Other Matters 17
Description of Earnings and
Dividend Rankings 17
This Prospectus does not contain all the information set forth in the
registration statements and exhibits relating thereto, which the Trust 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.
Van Kampen Merritt
Utility Income Trust
__________________
Prospectus
Part Two
__________________
Note: This Prospectus May Be Used Only When Accompanied by Part One. Both
parts of this Prospectus should be retained for future reference.
Dated as of the Date of the Prospectus Part I accompanying this Prospectus
Part II
Sponsor:
Van Kampen Merritt
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Mellon Bank Center
1735 Market Street
Suite 1300
Philadelphia, Pennsylvania 19103
Contents of Post-Effective Amendment
to Registration Statement
This Post-Effective Amendment to the Registration Statement
comprises the following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen Merritt Utility Income Trust, Series 4, certifies
that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Chicago and State of Illinois on the 25th
day of April, 1994.
Van Kampen Merritt Utility Income
Trust, Series 4
(Registrant)
By Van Kampen Merritt Inc.
(Depositor)
By Sandra A. Waterworth
Vice President
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this
Post Effective Amendment to the Registration Statement has been signed
below by the following persons in the capacities on April 25, 1994:
Signature Title
John C. Merritt Chairman, Chief Executive )
Officer and Director )
)
William R. Rybak Senior Vice President and )
Chief Financial Officer )
)
Ronald A. Nyberg Director )
)
William R. Molinari Director )
) Sandra A. Waterworth
) (Attorney in Fact)*
____________________
* An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income
Trust, 113th Insured Multi-Series (File No. 33-46036) and the same
are hereby incorporated herein by this reference.
Consent of Independent Certified Public Accountants
We have issued our report dated March 4, 1994 accompanying the
financial statements of Van Kampen Merritt Utility Income Trust, Series 4
as of December 31, 1993, and for the period then ended, contained in this
Post-Effective Amendment No. 6 to Form S-6.
We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".
Grant Thornton
Chicago, Illinois
April 25, 1994
