File No. 33-55788
CIK #895332
Securities and Exchange Commission
Washington, D. C. 20549-1004
Post-Effective
Amendment No. 4
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 Equity Opportunity Trust, Series 3
(Exact Name of Trust)
Van Kampen American Capital Distributors, Inc.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
Van Kampen American Capital Distributors, Inc. Chapman and Cutler
Attention: Don G. Powell 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 24, 1997 pursuant to paragraph (b) of Rule 485.
VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST, SERIES 3
Van Kampen Merritt Blue Chip Opportunity and Treasury Trust, Series 2
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 Van Kampen Merritt Equity Opportunity Trust, Series 3 (the "Trust")
is comprised of one unit investment trust, Van Kampen Merritt Blue Chip
Opportunity and Treasury Trust, Series 2 (the "Blue Chip Opportunity and
Treasury Trust" ). The Blue Chip Opportunity and Treasury Trust offers
investors the opportunity to purchase Units representing proportionate
interests in a fixed, diversified portfolio of the 30 actively traded "
blue chip" equity securities which were components of the Dow
Jones Industrial Average* on the Initial Date of Deposit plus "zero coupon"
U.S. Treasury obligations. Dow Jones & Company, Inc. has not participated
in any way in the creation of the Trust or in the selection of stocks
included in either Trust and has not approved any information herein
relating thereto. Unless terminated earlier, each Trust will terminate on
February 15, 2004 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.
PUBLIC OFFERING PRICE
The Public Offering Price per Unit of each Trust is equal to the aggregate
underlying value of the Equity Securities in such Trust (plus, in the case of
the Select Equity and Treasury Trust, the aggregate bid price of the Treasury
Obligations) plus or minus cash, if any, in the Capital and Income Accounts,
divided by the number of Units outstanding, plus the applicable sales charge.
See "Summary of Essential Financial Information."
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 Dow Jones Industrial Average is the property of Dow Jones & Company,
Inc. Dow Jones & Company, Inc. has not granted to the Trust or the Sponsor a
license to use the Dow Jones Industrial Average.
The Date of this Prospectus is April 16, 1997
Van Kampen American Capital
VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST, SERIES 3
Blue Chip Opportunity and Treasury Trust, Series 2
Summary of Essential Financial Information
As of March 5, 1997
Sponsor: Van Kampen American Capital Distributors, Inc.
Supervisor: Van Kampen American Capital Investment Advisory Corp.
(An affiliate of the Sponsor)
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
Blue Chip
Opportunity
and
Treasury Trust
--------------
<S> <C>
General Information
Aggregate Maturity Value of Treasury Obligations Initially Deposited................................. 15,900,000
Number of Units...................................................................................... 929,118
Fractional Undivided Interest in the Trust per Unit ................................................. 1/929,118
Public Offering Price: ..............................................................................
Aggregate Value of Securities in Portfolio <F1>..................................................... $ 13,203,344
Aggregate Value of Securities per Unit (including accumulated dividends)............................ $ 14.02
Sales charge 4.0% (4.167% of Aggregate Value of Securities excluding principal cash per Unit)<F3>... $ .59
Public Offering Price per Unit <F2>................................................................. $ 14.61
Redemption Price per Unit............................................................................ $ 14.02
Secondary Market Repurchase Price per Unit........................................................... $ 14.02
Excess of Public Offering Price per Unit Over Redemption Price per Unit.............................. $ .59
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee...Maximum of $.0025 per Unit
Evaluator's Annual Fee ...............Maximum of $.0025 per Unit
Evaluations for purpose of sale,
purchase or redemption of Units are
made as of 4:00 P.M. Eastern time on
days of trading on the New York Stock
Exchange next following receipt of an
order for a sale or purchase of Units
or receipt by The Bank of New York of
Units tendered for redemption.
Date of Deposit.......................February 23, 1993
Mandatory Termination Date............February 15, 2004
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Special Information......................................
Calculation of Estimated Net Annual Dividends per Unit...
Estimated Gross Annual Dividends per Unit............... $ .10831
Less: Estimated Expenses per Unit....................... $ .01704
Estimated Net Annual Dividends per Unit................. $ .09127
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee................$.008 per Unit
Income Distribution Record Date.....TENTH day of March, June, September, and December.
Income Distribution Date............TWENTY-FIFTH day of March, June, September and December.
Capital Account Record Date.........TENTH day of December.
Capital Account Distribution Date...TWENTY-FIFTH day of December.
- ----------
<FN>
<F1>Equity Securities listed on a national securities exchange are valued at the
closing sale price, or if no such price exists, at the last available bid
prices. Treasury Obligations are valued at the last available bid price.
<F2>Anyone ordering Units will have added to the Public Offering Price a pro rata
share of any cash in the Income and Capital Accounts.
<F3>Effective on each March 1, commencing March 1, 1994, the secondary sales
charge will decrease by .3 of 1% to a minimum sales charge of 1.5%. See "
Public Offering-Offering Price" in Part Two.
</TABLE>
PORTFOLIO
The Blue Chip Opportunity and Treasury Trust consists of 33 different issues
of Equity Securities, all of which are actively traded, blue-chip securities
issued by large, well established corporations and all of which (except for
Allstate Corporation which was acquired in a spin-off from Sears, Roebuck &
Company, Lucent Technologies which was aquired in a spin-off from AT&T and
Imation Corporation which was acquired in a spin-off from 3M), taken together,
were components of the Dow Jones Industrial Average on the Initial Date of
Deposit plus zero coupon U.S. Treasury obligations. Each issue, as of the
Initial Date of Deposit, represented approximately the same dollar value of a
portfolio since the Sponsor utilized a dollar weighted average approach in
acquiring such Equity Securities. Dow Jones & Company, Inc., owner of the Dow
Jones Industrial Average, has not granted to the Fund or the Sponsor a license
to use the Dow Jones Industrial Average. Units are not designed so that their
prices will parallel or correlate with movements in the Dow Jones Industrial
Average, and it is expected that their prices will not parallel or correlate
with such movements. Dow Jones & Company, Inc. has not participated in any way
in the creation of the Fund or in the selection of stocks included in either
Trust and has not approved any information herein relating thereto.
PER UNIT INFORMATION
<TABLE>
<CAPTION>
1993<F1> 1994 1995 1996
------------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
Net asset value per Unit at beginning of period................................. $ 9.10 $ 10.27 $ 9.77 $ 12.86
============= ========== ============= ===========
Net asset value per Unit at end of period....................................... $ 10.27 $ 9.77 $ 12.86 $ 13.69
============= ========== ============= ===========
Distributions to Unitholders of investment income including accumulated
dividends paid on Units redeemed (average Units outstanding for entire period
<F1>............................................................................ $ .08 $ .10 $ .07 $ 0.07
============= ========== ============= ===========
Distributions to Unitholders from Equity Security redemption proceeds (average
Units outstanding for entire period)............................................ $ -- $ -- $ -- $ --
============= ========== ============= ===========
Unrealized appreciation (depreciation) of Equity Securities (per Unit
outstanding at end of period)................................................... $ .44 $ (1.48) $ 2.30 $ 0.36
============= ========== ============= ===========
Units outstanding at end of period.............................................. 1,590,000 1,330,179 1,111,454 960,499
</TABLE>
- ----------
For the period from February 23, 1993 (initial date of deposit) through
December 31, 1993.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen Merritt Equity Opportunity Trust, Series 3
(Blue Chip Opportunity and Treasury Trust):
We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of Van Kampen Merritt Equity
Opportunity Trust, Series 3 (Blue Chip Opportunity and Treasury Trust) as of
December 31, 1996, and the related statements of operations and changes in net
assets for the three years ended December 31, 1996. 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, 1996 by
correspondence with the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee and
the Sponsor, as well as evaluating the overall financial statement
presentation. We believe our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Van Kampen Merritt Equity
Opportunity Trust, Series 3 (Blue Chip Opportunity and Treasury Trust) as of
December 31, 1996, and the results of operations and changes in net assets for
the three years ended December 31, 1996, in conformity with generally accepted
accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
March 14, 1997
<TABLE>
VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST
SERIES 3
Statements of Condition
December 31, 1996
<CAPTION>
Blue
Chip
Opportunity
and
Treasury
Trust
<S> <C>
Trust property
Cash.................................................................................. $ 8,390
Securities at market value, (cost $11,505,655) (note 1)............................... 13,133,119
Accumulated dividends................................................................. 8,687
$ 13,150,196
===============
Liabilities and interest to Unitholders
Redemptions payable................................................................... $ 3,814
Interest to Unitholders............................................................... 13,146,382
$ 13,150,196
===============
Analyses of Net Assets
Interest of Unitholders (960,499 Units of fractional undivided interest outstanding)
Cost to original investors of 1,700,000 Units (note 1)................................ $ 16,327,118
Less initial underwriting commission (note 3)......................................... 100,330
---------------
16,226,788
Less redemption of 739,501 Units...................................................... 8,037,446
---------------
8,189,342
Undistributed net investment income
Net investment income................................................................. 3,019,834
Less distributions to Unitholders..................................................... 402,320
---------------
2,617,514
Realized gain (loss) on Security sale or redemption................................... 712,062
Unrealized appreciation (depreciation) of Securities (note 2)......................... 1,627,464
Distributions to Unitholders of Security sale or redemption proceeds.................. --
Net asset value to Unitholders........................................................ $ 13,146,382
===============
Net asset value per Unit (960,499 Units outstanding)................................... $ 13.69
===============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
VAN KAMPEN MERRITT BLUE CHIP OPPORTUNITY AND TREASURY TRUST, SERIES 2
Statements of Operations
Years ended December 31,
<CAPTION>
1994 1995 1996
--------------- ------------- -------------
<S> <C> <C> <C>
Investment income
Dividend income..................................................... $ 164,461 $ 102,671 $ 95,119
Interest income..................................................... 768,417 735,862 593,872
--------------- ------------- -------------
932,878 838,533 688,991
Expenses
Trustee fees and expenses........................................... 22,293 12,331 11,234
Evaluator fees...................................................... 1,375 3,609 3,161
Supervisory fees.................................................... 2,130 2,507 2,790
--------------- ------------- -------------
Total expenses...................................................... 25,798 18,447 17,185
--------------- ------------- -------------
Net investment income............................................... 907,080 820,086 671,806
Realized gain (loss) from Security sale or redemption
Proceeds............................................................ 3,567,999 2,426,539 1,941,988
Cost................................................................ 3,134,579 2,120,189 1,972,187
--------------- ------------- -------------
Realized gain (loss)................................................ 433,420 306,350 (30,199)
Net change in unrealized appreciation (depreciation) of Securities... (1,973,943) 2,557,796 348,420
--------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS......$ (633,443) $ 3,684,232 $ 990,027
=============== ============= =============
</TABLE>
<TABLE>
Statements of Changes in Net Assets
Years ended December 31,
<CAPTION>
1994 1995 1996
--------------- --------------- ---------------
<S> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income............................................................. $ 907,080 $ 820,086 $ 671,806
Realized gain (loss) on Security sale or redemption............................... 433,420 306,350 (30,199)
Net change in unrealized appreciation (depreciation) of Securities................ (1,973,943) 2,557,796 348,420
--------------- --------------- ---------------
Net increase (decrease) in net assets resulting from operations................... (633,443) 3,684,232 990,027
Distributions to Unitholders from:
Net investment income............................................................. (141,294) (85,330) (74,257)
Security sale or redemption proceeds.............................................. -- -- --
Redemption of Units (3,577,483) (2,419,074) (1,947,489)
--------------- --------------- ---------------
Total increase (decrease)......................................................... (4,352,220) 1,179,828 (1,031,719)
Net asset value to Unitholders
Beginning of period............................................................... 16,324,225 12,998,273 14,178,101
Additional Securities purchased from proceeds of Unit Sales....................... 1,026,268 -- --
--------------- --------------- ---------------
End of period (including undistributed net investment income of $1,285,209,
$2,019,965 and $2,617,514, respectively)........................................... $ 12,998,273 $ 14,178,101 $ 13,146,382
=============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
<TABLE>
VAN KAMPEN MERRITT BLUE CHIP OPPORTUNITY AND TREASURY TRUST, SERIES 2
PORTFOLIO as of December 31, 1996
<CAPTION>
Valuation of
Securities at
Number December 31,
of Market Value Per 1996
Shares Name of Issuer Share (Note 1)
- ---------- --------------------------------------------------- --------------------- ------------------
<S> <C> <C> <C>
2,435 Allied Signal, Incorporated $ 67.000 $ 163,145
- -------------------------------------------------------------------------------------------------------
2,234 Allstate Corporation 57.875 129,293
- -------------------------------------------------------------------------------------------------------
1,770 Aluminum Company of America (ALCOA) 63.750 112,838
- -------------------------------------------------------------------------------------------------------
2,775 American Express Company 56.500 156,787
- -------------------------------------------------------------------------------------------------------
2,224 American Telephone and Telegraph (AT&T) 43.500 96,744
- -------------------------------------------------------------------------------------------------------
3,346 Bethlehem Steel Corporation 9.000 30,114
- -------------------------------------------------------------------------------------------------------
1,912 The Boeing Company 106.375 203,289
- -------------------------------------------------------------------------------------------------------
1,979 Caterpillar Incorporated 75.250 148,920
- -------------------------------------------------------------------------------------------------------
2,329 Chevron Corporation 65.000 151,385
- -------------------------------------------------------------------------------------------------------
3,556 Coca-Cola Enterprises, Incorporated 52.625 187,134
- -------------------------------------------------------------------------------------------------------
2,591 Walt Disney Company 69.625 180,398
- -------------------------------------------------------------------------------------------------------
2,062 DuPont (E.I) de Nemours & Company 94.375 194,601
- -------------------------------------------------------------------------------------------------------
2,239 Eastman Kodak Company 80.250 179,680
- -------------------------------------------------------------------------------------------------------
1,838 Exxon Corporation 98.000 180,124
- -------------------------------------------------------------------------------------------------------
1,945 General Electric Company 98.875 192,312
- -------------------------------------------------------------------------------------------------------
2,641 General Motors 55.750 147,236
- -------------------------------------------------------------------------------------------------------
2,429 Goodyear Tire & Rubber Company 51.375 124,790
- -------------------------------------------------------------------------------------------------------
170 Imation Corporation 28.125 4,781
- -------------------------------------------------------------------------------------------------------
1,509 International Business Machines (IBM) 151.000 227,859
- -------------------------------------------------------------------------------------------------------
3,542 International Paper Company 40.375 143,008
- -------------------------------------------------------------------------------------------------------
720 Lucent Technologies 46.250 33,300
- -------------------------------------------------------------------------------------------------------
1,874 J.P. Morgan & Company, Incorporated 97.625 182,949
- -------------------------------------------------------------------------------------------------------
2,844 McDonald's Corporation 45.250 128,691
- -------------------------------------------------------------------------------------------------------
2,376 Merck & Company, Incorporated 79.250 188,298
- -------------------------------------------------------------------------------------------------------
1,708 Minnesota Mining and Manufacturing Company (3M) 82.875 141,551
- -------------------------------------------------------------------------------------------------------
1,838 Phillip Morris Companies Incorporated 112.625 207,005
- -------------------------------------------------------------------------------------------------------
1,811 The Procter & Gamble Company 107.500 194,682
- -------------------------------------------------------------------------------------------------------
2,680 Sears, Roebuck & Company 46.125 123,615
- -------------------------------------------------------------------------------------------------------
1,926 Texaco, Incorporated 98.125 188,989
- -------------------------------------------------------------------------------------------------------
2,623 Union Carbide Corporation 40.875 107,215
- -------------------------------------------------------------------------------------------------------
3,246 United Technologies Corporation 66.000 214,236
- -------------------------------------------------------------------------------------------------------
3,537 Westinghouse Electric Corporation 19.875 70,298
- -------------------------------------------------------------------------------------------------------
1,835 Woolworth Corporation 21.875 40,141
-
74,544 $ 4,775,508
========== ==================
</TABLE>
<TABLE>
<CAPTION>
Maturity
Value Name of Issuer and Title of Security
- -------------- -----------------------------------------------------------------------
<S> <C> <C>
$13,070,000 "Zero coupon" U.S. Treasury bonds maturing February 15, 2004... 8,357,611
============== --------------
$ 13,133,119
==============
</TABLE>
The accompanying notes are an integral part of these statements.
VAN KAMPEN MERRIT EQUITY OPPORTUNITY TRUST SERIES 3
Notes to Financial Statements
December 31, 1994, 1995 and 1996
- --------------------------------------------------------------------------
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 not listed, at the closing bid
price. Treasury obligations are valued at the closing bid 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. The original cost of the Treasury obligations was
based on the closing bid price. In each case, the costs were determined on the
day of the various Dates of Deposit and included 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 - 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.
Distributions to Unitholders of the Trust's taxable income will be taxable as
ordinary or capital gain income to Unitholders.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an average cost basis. Since the date of deposit, undistributed
net investment income includes $2,598,723 of accreted interest.
NOTE 2 - PORTFOLIO
Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Blue Chip
Opportunity and
Treasury Trust
-------------------
<S> <C>
Unrealized Appreciation $ 2,150,221
Unrealized Depreciation (552,757)
-------------------
$ 1,627,464
===================
</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 4.9% of the public offering price which is equivalent to
5.152% 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 4.9% of the public offering price which is 5.152% of the underlying value
of the Securities. Effective on each March 1, commencing March 1, 1994, the
secondary sales charge will decrease by .3 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 ($.0025 per Unit, not
to exceed the aggregate cost of the Supervisor for providing such services to
all applicable Trusts). The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio. Both fees may be adjusted for increases
under the category "All Services Less Rent of Shelter" in the Consumer
Price Index.
NOTE 4 - REDEMPTION OF UNITS
During the three years ended December 31, December 31, 1994, 1995 and 1996,
359,821 Units, 218,725 Units and 150,955 Units, respectively, were presented
for redemption.
VAN KAMPEN MERRITT SELECT EQUITY AND TREASURY TRUST AND
VAN KAMPEN MERRITT BLUE CHIP OPPORTUNITY AND TREASURY TRUST
PROSPECTUSPART TWO
The Fund. Van Kampen Merritt Equity Opportunity Trust (the "Fund" ) is
comprised of separate and distinct unit investment trusts including Van Kampen
Merritt Select Equity and Treasury Trust (the "Select Equity and Treasury
Trust" ) and Van Kampen Merritt Blue Chip Opportunity and Treasury Trust
(the "Blue Chip Opportunity and Treasury Trust" ). The Select Equity
and Treasury Trust and the Blue Chip Opportunity and Treasury Trust each offer
investors the opportunity to purchase Units representing proportionate
interests in a fixed, diversified portfolio primarily consisting of the 30
actively traded "blue chip" equity securities which were components of
the Dow Jones Industrial Average on the original date of creation of the Trust
plus "zero coupon" U.S. Treasury obligations. Dow Jones & Company,
Inc. has not participated in any way in the creation of the Fund or in the
selection of stocks included in the Trusts and has not approved any
information herein relating thereto. Unless terminated earlier, each 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 Trusts. The objectives of the Select Equity and Treasury
Trust and the Blue Chip Opportunity and Treasury Trust are to protect
Unitholders' capital and provide the potential for capital appreciation and
income by investing a portion of its portfolio in "zero coupon" U.S.
Treasury obligations ("Treasury Obligations" ) and the remainder of the
Trust's portfolio primarily consisting of actively traded, New York Stock
Exchange listed equity securities which were components of the Dow Jones
Industrial Average on the original date of creation of the Trust ("Equity
Securities" ). Collectively, the Treasury Obligations and the Equity
Securities are referred to herein as the "Securities." See "
Portfolio" in Part One of this Prospectus. Units are not designed so that
their prices will parallel or correlate with movements in the Dow Jones
Industrial Average, and it is expected that their prices will not parallel or
correlate with such movements. The Treasury Obligations in the Select Equity
and Treasury Trust and the Blue Chip Opportunity and Treasury Trust evidence
the right to receive a fixed payment at a future date from the U.S. Government
and are backed by the full faith and credit of the U.S. Government. The
guarantee of the U.S. Government does not apply to the market value of the
Treasury Obligations of the Units of the Select Equity and Treasury Trust or
the Blue Chip Opportunity and Treasury Trust, whose net asset value will
fluctuate and, prior to maturity, may be worth more or less than a
purchaser's acquisition cost. There is, of course, no guarantee that the
objectives of the Trusts will be achieved.
Public Offering Price. The secondary market Public Offering Price of the Trust
will include the aggregate underlying value of the Securities in the Trust,
the applicable sales charge as described herein, and cash, if any, in the
Income and Capital Accounts held or owned by the Trust. The minimum purchase
for an individual Trust is 500 Units and 100 Units 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 a 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.
Principal Protection. The Select Equity and Treasury Trust and the Blue Chip
Opportunity and Treasury Trust were both organized so that purchasers of Units
should receive, at the termination of such Trusts, an amount per Unit at least
equal to $10.00 (which is equal to the per Unit value upon maturity of the
Treasury Obligations), even if the respective Trust never paid a dividend and
the value of the Equity Securities were to decrease to zero, which the Sponsor
considers highly unlikely. This feature of the Select Equity and Treasury
Trust and the Blue Chip Opportunity and Treasury Trust provides Unitholders
who purchase Units at the price of $10.00 or less per Unit with total
principal protection, including any sales charges paid, although they might
forego any earnings on the amount invested. To the extent that Units are
purchased at a price less than $10.00 per Unit, this feature may also provide
a potential for capital appreciation. It should be remembered, however, that
the value of the Treasury Obligations may fluctuate before maturity due to
fluctuations in interest rates.
Units of the Fund are not deposits or obligations of, and are not guaranteed
or endorsed by, any bank, and are not federally insured or otherwise protected
by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other agency, and involve investment risk, including the possible loss of
principal.
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.
Both parts of this Prospectus should be retained for future reference.
This Prospectus is dated as of the date of the Prospectus Part I accompanying
this Prospectus Part II.
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.
Van Kampen American Capital
Distributions. Distributions of dividends received, and capital, if any,
received by each Trust will be paid in cash on the applicable Distribution
Date to Unitholders of record on the record date as set forth in the "
Summary of Essential Financial Information" in Part One of this
Prospectus. Income with respect to the amortization of original issue discount
on the Treasury Obligations in the Select Equity and Treasury Trust and the
Blue Chip Opportunity and Treasury Trust will not be distributed currently,
although Unitholders will be subject to income tax at ordinary income rates as
if a distribution had occurred. Any distribution of income and/or capital will
be net of the expenses of the applicable Trust. See "Federal Taxation."
Additionally, upon termination of each Trust, the Trustee will distribute,
upon surrender of Units for redemption, to each Unitholder his pro rata share
of each Trust's assets, less expenses, in the manner set forth under "
Rights of UnitholdersDistributions of Income and Capital" .
Termination. Commencing on the Mandatory Termination Date as specified in Part
One for each Trust, Equity Securities will begin to be sold in connection with
the termination of a Trust. The Sponsor will determine the manner, timing and
execution of the sale of the Equity Securities. Written notice of any
termination of a Trust 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. At least 30 days prior to the Mandatory
Termination Date for the respective Trusts the Trustee will provide written
notice thereof to all Unitholders and will include with such notice a form to
enable Unitholders to elect a distribution of shares of Equity Securities if
such Unitholder owns at least 5,000 Units of a Trust (2,500 Units in the case
of the Blue Chip Opportunity and Treasury, Series 3), rather than to receive
payment in cash for such Unitholder's pro rata share of the amounts realized
upon the disposition by the Trustee of Equity Securities. All Unitholders will
receive cash in lieu of any fractional shares and cash representing their pro
rata portion of the Treasury Obligations, if any. To be effective, the
election form, together with surrendered certificates, if issued, and other
documentation required by the Trustee, must be returned to the Trustee at
least five business days prior to the Mandatory Termination Date. Unitholders
not electing a distribution of shares of Equity Securities will receive a cash
distribution from the sale of the remaining Securities within a reasonable
time after the Trust terminated. See "Trust AdministrationReinvestment
Option."
Reinvestment Option. Unitholders of any Van Kampen American Capital-sponsored
unit investment trust may utilized their redemption or termination proceeds to
purchase units of any other Van Kampen American Capital trust in the initial
offering period accepting rollover investments subject to a reduced sales
charge to the extent stated in the related prospectus (which may be deferred
in certain cases). Unitholders have the opportunity to have their
distributions reinvested into an open-end, management investment company as
described herein. See "Rights of UnitholdersReinvestment Option."
Risk Factors. An investment in a Trust should be made with an understanding of
the risks associated therewith, including the possible deterioration of either
the financial condition of the issuers or the general condition of the stock
market and currency fluctuations, the lack of adequate financial information
concerning an issuer and exchange control restrictions impacting foreign
issuers. See "Risk Factors" .
THE TRUSTS
Van Kampen Merritt Equity Opportunity Trust (the "Fund" ) is comprised
of separate and distinct unit investment trusts, including Van Kampen Merritt
Select Equity and Treasury Trust and Van Kampen Merritt Blue Chip Opportunity
and Treasury Trust. The Fund was created under the laws of the State of New
York pursuant to a Trust Indenture and Agreement (the "Trust Agreement"
), among Van Kampen American Capital Distributors, Inc., as Sponsor, American
Portfolio Evaluation Services, a division of Van Kampen American Capital
Investment Advisory Corp., as Evaluator, Van Kampen American Capital
Investment Advisory Corp., as Supervisor, and The Bank of New York, as Trustee.
The Select Equity and Treasury Trust and the Blue Chip Opportunity and
Treasury Trust may be appropriate mediums for investors who desire to
participate in a portfolio of equity securities and zero-coupon U.S. Treasury
obligations with greater diversification with regard to the equity securities
than they might be able to acquire individually. Diversification of assets in
the Trusts will not eliminate the risk of loss always inherent in the
ownership of securities. For a breakdown of the portfolio see "
Portfolio" in Part One of this Prospectus.
Each Unit represents a fractional undivided interest in the Trust involved. To
the extent that any Units are redeemed by the Trustee, the fractional
undivided interest in a 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 Select Equity and Treasury Trust and the Blue Chip
Opportunity and Treasury Trust are to protect Unitholders' capital and
provide investors with the potential for capital appreciation and income. The
portfolio of each Trust is described under "Trust Portfolios" herein
and under "Portfolio" in Part One of this Prospectus. An investor will
be subjected to taxation on the dividend income received from the Fund and on
gains from the sale or liquidation of Securities (see "Federal
Taxation" ). Investors should be aware that there is not any guarantee that
the objectives of any of the Trusts 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
Equity Securities will pay dividends on outstanding common shares. The Select
Equity and Treasury Trust and the Blue Chip Opportunity and Treasury Trust,
however, were both organized so that investors should receive, at termination
of such Trusts, an amount per Unit at least equal to $10.00 (which is equal to
the per Unit value upon maturity of the Treasury Obligations), even if such
Trusts never paid a distribution and the value of the Equity Securities were
to decrease to zero, which the Sponsor considers highly unlikely. 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 Select Equity and Treasury Trust and the Blue
Chip Opportunity and Treasury Trust, the following factors, among others, were
considered by the Sponsor: (a) for the portion of the Securities that are
Equity Securities, the Sponsor selected those Equity Securities that were, at
the date of creation of the Fund, components of the Dow Jones Industrial
Average and the dollar value of the shares of such securities with the intent
to have approximately equal dollar amounts invested in each such security, and
(b) for the portion of the Securities that are Treasury Obligations, the
evidence of the right to receive a fixed payment at a future date from the
U.S. Government, backed by the full faith credit of the U.S. Government.
Investors should note that the above criteria were applied to the Securities
selected for inclusion in the Trusts as of the date the Trusts were created.
Subsequent thereto, the Equity Securities may no longer meet such criteria.
Should an Equity Security no longer meet such criteria, such Equity Security
will not as a result thereof be removed from the portfolio of a Trust.
Investors should be aware that the Fund 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 AdministrationPortfolio Administration" ). In addition,
Securities will not be sold by a Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Investors should
note in particular that the securities were selected by the Sponsor as of the
date the Securities were purchased by the Trust involved. Each 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 such Trust.
TRUST PORTFOLIOS
Each Trust consists of a number of different issues of Equity Securities, all
of which are actively traded, blue-chip securities issued by large, well
established corporations and all of which, taken together, were components of
the Dow Jones Industrial Average on the date of creation of such Trust plus
zero-coupon U.S. Treasury Obligations. Each Equity Security, as of such date,
represented approximately the same dollar value of a portfolio since the
Sponsor utilized a dollar weighted average approach in acquiring such Equity
Securities. On March 12, 1997, Dow Jones and Co. Inc. announced that
Hewlett-Packard Co., Travelers Group, Inc., Johnson & Johnson Inc. and
Wal-Mart Stores Inc. would replace Westinghouse Electric Corp., Texaco Inc.,
Woolworth Corp. and Bethlehem Steel Corp. in the Dow Jones Industrial Average
as of March 17, 1997. Consistent with the Trust's investment objective,
neither this nor any other change in components of the Dow Jones Industrial
Average will result in a change to the Trust portfolio. Dow Jones & Company,
Inc., owner of the Dow Jones Industrial Average, has not granted to the Fund
or the Sponsor a license to use the Dow Jones Industrial Average. Units are
not designed so that their prices will parallel or correlate with movements in
the Dow Jones Industrial Average, and it is expected that their prices will
not parallel or correlate with such movements. Dow Jones & Company, Inc. has
not participated in any way in the creation of the Fund or in the selection of
stocks included in any of the Trusts and has not approved any information
herein relating thereto.
The Dow Jones Industrial Average is composed of 30 common stocks chosen by the
editors of The Wall Street Journal, a publication of Dow Jones & Company, Inc.
The companies are major factors in their industries and their stocks are
widely held by individuals and institutional investors. Changes in the
components are made entirely by the editors of The Wall Street Journal without
consultation with the companies, the stock exchange or any official agency.
Dow Jones & Company, Inc. expressly reserves the right to change the
components of the Dow Jones Industrial Average at any time for any reason. Any
changes in the components of the Dow Jones Industrial Average after the date
the Fund was created will not cause a change in the identity of the common
stocks included in any of the Trusts.
The Trusts consist 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 Trusts 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.
RISK FACTORS
Equity Securities. An investment in Units should be made with an understanding
of the risks which an investment in common stocks entails, including the risk
that the financial condition of the issuers of the Equity Securities or the
general condition of the common stock market may worsen and the value of the
Equity Securities and therefore the value of the Units may decline. Common
stocks are especially susceptible to general stock market movements and to
volatile increases and decreases of value as market confidence in and
perceptions of the issuers change. These perceptions are based on
unpredictable factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
Shareholders of common stocks have rights to receive payments from the issuers
of those common stocks that are generally subordinate to those of creditors of
or holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by the Fund 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 is subject to market fluctuations for as long as the common stocks
remain outstanding, and thus the value of the Equity Securities may be
expected to fluctuate over the life of the Fund to values higher or lower than
those prevailing on the date of purchase by a Unitholder.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison
with the rights of creditors of, or holders of debt obligations or preferred
stocks issued by the issuer. Cumulative preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stockholders are also generally entitled to rights
on liquidation which are senior to those of common stockholders.
Treasury Obligations. The Treasury Obligations deposited in the Select Equity
and Treasury Trust and the Blue Chip Opportunity and Treasury Trust consist of
U.S. Treasury bonds which have been stripped of their unmatured interest
coupons. The Treasury Obligations evidence the right to receive a fixed
payment at a future date from the U.S. Government and are backed by the full
faith and credit of the U.S. Government. Treasury Obligations are purchased at
a deep discount because the buyer obtains only the right to a fixed payment at
a fixed date in the future and does not receive any periodic interest
payments. The effect of owning deep discount bonds which do not make current
interest payments (such as the Treasury Obligations) is that a fixed yield is
earned not only on the original investment, but also, in effect, on all
earnings during the life of the discount obligation. This implicit
reinvestment of earnings at the same rate eliminates the risk of being unable
to reinvest the income on such obligations at a rate as high as the implicit
yield on the discount obligation, but at the same time eliminates the
holder's ability to reinvest at higher rates in the future. For this reason,
the Treasury Obligations are subject to substantially greater price
fluctuations during periods of changing interest rates than are securities of
comparable quality which make regular interest payments. The effect of being
able to acquire the Treasury Obligations at a lower price is to permit more of
such Trusts' portfolio to be invested in Equity Securities.
General. Each Trust consists of such of the Securities listed under "
Portfolio" as may continue to be held from time to time in such Trust in
Part One of this Prospectus 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 Equity 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 a Trust will retain for any length of time its
present size and composition. Although the portfolios are not managed, the
Sponsor may instruct the Trustee to sell Equity Securities under certain
limited circumstances. See "Trust Administration." Equity Securities,
however, will not be sold by a Trust to take advantage of market fluctuations
or changes in anticipated rates of appreciation or depreciation.
Unitholders will be unable to dispose of any of the Equity Securities as such,
and will not be able to vote the Equity Securities. As the holder of the
Equity Securities, the Trustee will have the right to vote all of the voting
stocks in a Trust and will vote such stocks in accordance with the
instructions of the Sponsor. Actions required to be taken with respect to the
Treasury Obligations will be in accordance with the instruction of the
Sponsor. Unitholders of the Trusts may, however, be able upon request to
receive an "in kind" distribution of these Securities evidenced by the
Units (see "Rights of UnitholdersRedemption of Units" ).
FEDERAL TAXATION
The following is a general discussion of certain of the federal income tax
consequences of the purchase, ownership and disposition of the Units. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221
of the Internal Revenue Code of 1986 (the "Code" ). Unitholders should
consult their tax advisers in determining the federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units in
the Trust. For purposes of the following discussion and opinion, it is assumed
that each Equity Security is equity for federal income purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal income
tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of
the Trust will be treated as income of the Unitholders thereof under the Code.
Each Unitholder will be considered to have received his pro rata share of
income derived from each Trust asset when such income is considered to be
received by the Trust.
2. Each Unitholder will be considered to have received all of the dividends
paid on his pro rata portion of each Equity Security when such dividends are
considered to be received by the Trust. Unitholders will be taxed in this
manner regardless of whether distributions from the Trust are actually
received by the Unitholder or are automatically reinvested.
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, liquidation, redemption, or payment at
maturity) or upon the sale or redemption of Units by such Unitholder. The
price a Unitholder pays for his Units, generally including sales charges, is
allocated among his pro rata portion of each Security held by the Trust (in
proportion to the fair market values thereof on the valuation date closes to
the date the Unitholder purchases his Units) in order to determine his initial
tax basis for his pro rata portion of each Security held by the Trust. It
should be noted that certain legislative proposals have been made which could
effect the calculation of basis for Unitholders holding securities that are
substantially identical to the Securities. Unitholders should consult their
own tax advisors with regard to calculation of basis. The Treasury Obligations
are treated as stripped bonds and may be treated as bonds issued at an
original issue discount as of the date a Unitholder purchases his Units.
Because the Treasury Obligations represent interests in "stripped"
U.S. Treasury bonds, a Unitholder's initial cost for his pro rata portion of
each Treasury Obligation held by the Trust shall be treated as its "
purchase price" by the Unitholder. Original issue discount is effectively
treated as interest for federal income tax purposes and the amount of original
issue discount in this case is generally the difference between the bond's
purchase price and its stated redemption price at maturity. A Unitholder will
be required to include in gross income for each taxable year the sum of his
daily portions of original issue discount attributable to the Treasury
Obligations held by the Trust as such original issue discount accrues and will
in general be subject to federal income tax with respect to the total amount
of such original issue discount that accrues for such year even though the
income is not distributed to the Unitholders during such year to the extent it
is not less than a "de minimis" amount as determined under a Treasury
Regulation issued on December 28, 1992 relating to stripped bonds. To the
extent the amount of such discount is less than the respective "de
minimis" amount, such discount shall be treated as zero. In general,
original issue discount accrues daily under a constant interest rate method
which takes into account the semi- annual compounding of accrued interest. In
the case of the Treasury Obligations, this method will generally result in an
increasing amount of income to the Unitholders each year. Unitholders should
consult their tax advisers regarding the federal income tax consequences and
accretion of original issue discount under the stripped bond rules. For
federal income tax purposes, a Unitholder's pro rata portion of dividends as
defined by Section 316 of the Code paid with respect to an Equity Security
held by the Trust are taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits" . A
Unitholder's pro rata portion of dividends paid on such Equity Security which
exceed such current and accumulated earnings and profits will first reduce a
Unitholder's tax basis in such Equity Security, and to the extent that such
dividends exceed a Unitholder's tax basis in such Equity Security shall
generally be treated as capital gain. In general, any such capital gain will
be short-term unless a Unitholder has held his Units for more than one year.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain except in the case of a dealer or a financial
institution and will be long-term if the Unitholder has held his Units for
more than one year (the date on which the Units are acquired (i.e., the "
trade date" ) is excluded for purposes of determining whether the Units
have been held for more than one year). A Unitholder's portion of loss, if
any, upon the sale or redemption of Units or the disposition of Securities
held by the Trust will generally be considered a capital loss (except in the
case of a dealer or a financial institution) and, in general, will be
long-term if the Unitholder has held his Units for more than one year.
Unitholders should consult their tax advisers regarding the recognition of
such capital gains and losses for federal income tax purposes.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such
Unitholder's pro rata portion of dividends received by the Trust (to the
extent such dividends are taxable as ordinary income, as discussed above and
are attributable to domestic corporations) in the same manner as if such
corporation directly owned the Equity Securities paying such dividends (other
than corporate Unitholders, such as "S" corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and
the personal holding corporation tax). However, a corporation owning Units
should be aware that Sections 246 and 246A of the Code impose additional
limitations on the eligibility of dividends for the 70% dividends received
deduction. These limitations include a requirement that stock (and therefore
Units) must generally be held at least 46 days (as determined under Section
246(c) of the Code). Final regulations have been issued which address special
rules that must be considered in determining whether the 46 day holding period
requirement is met. Moreover, the allowable percentage of the deduction will
be reduced from 70% if a corporate Unitholder owns certain stock (or Units)
the financing of which is directly attributable to indebtedness incurred by
such corporation. It should be noted that various legislative proposals that
would affect the dividends received deduction have been introduced.
Unitholders should consult with their tax advisers with respect to the
limitations on and possible modifications to the dividends received
deductions. To the extent dividends received by the Trust are attributable to
foreign corporations, a corporation that owns Units will not be entitled to
the dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. It should be noted that as a result of the Tax Reform Act of 1986,
certain miscellaneous itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be deductible by
an individual only to the extent they exceed 2% of such individual's adjusted
gross income. Unitholders may be required to treat some or all of the expenses
of the Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by a Trust
or Disposition of Units. As discussed above, a Unitholder may recognize
taxable gain (or loss) when a Security is disposed of by the Trust or if the
Unitholder disposes of a Unit. For taxpayers other than corporations, net
capital gains (which are defined as net long-term capital gain over net
short-term capital loss for a taxable year) are subject to a maximum marginal
stated tax rate of 28%. However, it should be noted that legislative proposals
are introduced from time to time that could affect tax rates and could affect
relative differences at which ordinary income and capital gains are taxed.
The Revenue Reconciliation Act of 1993 (the "Act" ) raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated
rate for taxpayers other than corporations. Because some or all capital gains
are taxed at a comparatively lower rate under the Act, the 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 or she is deemed thereby to have
disposed of his or her entire pro rata interest in all assets of the Trust
involved, including his or her pro rata portion of all the Securities
represented by the Unit. Legislative proposals have been made that would treat
certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain as constructive sales for purposes of recognition of
gain (but not loss). Unitholders should consult their own tax advisors with
regard to any such constructive sales rules.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of a Trust. As discussed in "Rights of Unitholders--Redemption
of Units" , under certain circumstances a Unitholder tendering Units for
redemption may request an In Kind Distribution. A Unitholder may also under
certain circumstances request an In Kind Distribution upon the termination of
the Trust. See "Rights of Unitholders--Redemption of Units." Treasury
Obligations will not be distributed to a Unitholder as part of an In Kind
Distribution. The tax consequences relating to the sale of Treasury
Obligations are discussed above. As previously discussed, prior to the
redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust assets for
federal income tax purposes. The receipt of an In Kind Distribution will
result in a Unitholder receiving an undivided interest in whole shares of
stock plus, possibly, cash.
The potential tax consequences that may occur under an In Kind Distribution
will depend on whether or not a Unitholder receives cash in addition to Equity
Securities. An "Equity Security" for this purpose is a particular
class of stock issued by a particular corporation (and does not include the
Treasury Obligations). A Unitholder will not recognize gain or loss with
respect to the Equity Securities if a Unitholder only receives Equity
Securities in exchange for his or her pro rata portion in each share of the
Equity Securities held by the Trust. However, if a Unitholder also receives
cash in exchange for a fractional share of an Equity Security held by the
Trust, such Unitholder will generally recognize gain or loss based upon the
difference between the amount of cash received by the Unitholder and his tax
basis in such fractional share of the Equity Security held by the Trust. In
either case, a Unitholder who receives cash in exchange for his interest in
the Treasury Obligations will generally recognize gain or loss based upon the
difference between the amount of cash received by the Unitholder and his tax
basis in the Treasury Obligations for the Treasury Obligations.
Because the Trust will own many Equity Securities, a Unitholder who requests
an In Kind Distribution will have to analyze the tax consequences with respect
to each Equity Security owned by the Trust. The amount of taxable gain (or
loss) recognized upon such exchange will generally equal the sum of the gain
(or loss) recognized under the rules described above by such Unitholder with
respect to each Equity Security owned by the Trust. 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 valuation date nearest the date the Units are purchased in
order to determine such Unitholder's tax basis for his pro rata portion of
each Security.
A Unitholder's tax basis in his Units and his pro rata portion of an Equity
Security 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. A Unitholder's tax basis in his Units and his pro rata
portion of a Treasury Obligation is increased by the amount of original issue
discount thereon properly included in the Unitholder's gross income for
federal income tax purposes.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the
Unitholder has not been notified by the Internal Revenue Service that payments
to the Unitholder are subject to back-up withholding. If the proper taxpayer
identification number and appropriate certification are not provided when
requested, distributions by the Trust to such Unitholder (including amounts
received upon the redemption of Units) will be subject to back-up withholding.
Distributions by the Trust (other than those that are not treated as United
States source income, if any) will generally be subject to United States
income taxation and withholding in the case of Units held by non-resident
alien individuals, foreign corporations or other non-United States persons
(accrual of original issue discount on the Treasury Obligations may not be
subject to taxation or withholding provided certain requirements are met).
Such persons should consult their tax advisers.
In general income that is not effectively connected to the conduct of a trade
or business within the United States that is earned by non-U.S. Unitholders
and derived from dividends of foreign corporations will not be subject to U.S.
withholding tax provided that less than 25 percent of the gross income of the
foreign corporation for a three-year period ending with the close of its
taxable year preceding payment was not effectively connected to the conduct of
a trade or business within the United States. In addition, such earnings may
be exempt from U.S. withholding pursuant to a specific treaty between the
United States and a foreign country. Non-U.S. Unitholders should consult their
own tax advisers regarding the imposition of U.S. withholding on distributions
from the Trust.
It should be noted that payments to the Trusts of dividends on Equity
Securities that are attributable to foreign corporation may be subject to
foreign withholding taxes and Unitholders should consult their tax advisers
regarding the potential tax consequences relating to the payment of any such
withholding taxes by the Trusts. Any dividends withheld as a result thereof
will nevertheless be treated as income to the Unitholders. Because, under the
grantor trust rules, an investor is deemed to have paid directly his share of
foreign taxes that have been paid or accrued, if any, an investor may be
entitled to a foreign tax credit or deduction for United States tax purposes
with respect to such taxes. Investors should consult their tax advisers with
respect to foreign withholding taxes and foreign tax credits.
Unitholders will be notified annually of the amounts of original issue
discount, dividend income and long-term capital gain distributions includable
in the Unitholder's gross income and amounts of Trust expenses which may be
claimed as itemized deductions.
Unitholders desiring to purchase Units for tax-deferred plans and Eras should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of special counsel to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the
Trust will be treated as the income of the Unitholders under the existing
income tax laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S. Unitholders
with regard to federal and certain aspects of 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 foreign, state or local taxation with respect to the Units. The term
U.S. Unitholder means an owner of a Unit of the Trust that is (a) is (i) for
United States federal income tax purposes a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized
in or under the laws of the United States or of any political subdivision
thereof, or (iii) an estate or trust the income of which is subject to United
States federal income taxation regardless of its source or (b) does not
qualify as a U.S. Unitholder in paragraph (a) but whose income from a Unit is
effectively connected with such Unitholder's conduct of a United States trade
or business. The term also includes certain former citizens of the United
States whose income and gain on the Units will be taxable.
TRUST OPERATING EXPENSES
Compensation of Sponsor and Evaluator. The Sponsor will not receive any fees
in connection with its activities relating to the Trusts. However, Van Kampen
American Capital Investment Advisory Corp., which is an affiliate of the
Sponsor, will receive an annual supervisory fee, payable in monthly
installments, 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 each 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 Fund, but at
no time will the total amount received for portfolio supervisory services
rendered to Series 1 and subsequent series of the Fund 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 American
Capital Distributors Inc., shall receive as an annual per Unit evaluation fee,
payable in monthly installments, for regularly evaluating each 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 OfferingSponsor and Dealer Compensation" .
Trustee's Fee. For its services the Trustee will receive as an annual per
Unit fee from the Trusts 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 twenty-fifth 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 a 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 UnitholdersReports Provided" and "Trust Administration" .
Miscellaneous Expenses. The following additional charges are or may be
incurred by a Trust: (a) normal expenses (including the cost of mailing
reports to Unitholders) incurred in connection with the operation of a Trust,
(b) fees of the Trustee for extraordinary services, (c) expenses of the
Trustee (including legal and auditing expenses) and of counsel designated by
the Sponsor, (d) various governmental charges, (e) expenses and costs of any
action taken by the Trustee to protect a Trust and the rights and interests of
Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of a Trust without negligence, bad
faith or wilful misconduct on its part and (g) expenditures incurred in
contacting Unitholders upon termination of the Trusts.
The fees and expenses set forth herein are payable out of each Trust. When
such fees and expenses are paid by or owning to the Trustee, they are secured
by a lien on the portfolio of each 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 a Trust. If the balances in the Income and Capital
Accounts are insufficient to provide for amounts payable by a 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. The secondary market
Public Offering Price is based on the aggregate underlying value of the
Securities in the Trust, an applicable sales charge (which will be reduced
annually by .3 of 1% to a minimum sales charge of 1.5%), and cash, if any, in
the Income and Capital Accounts held or owned by the Trust.
Employees of Van Kampen American Capital Distributors, Inc. and its affiliates
may purchase Units of each Trust at the current Public Offering Price less the
dealer's concession described below. Registered representatives of selling
underwriters, brokers, dealers, or agents may purchase Units of the Fund at
the current Public Offering Price less the dealer's concession described
below.
Units may be purchased in the secondary market at the Public Offering Price
(for purchases which do not qualify for a sales charge reduction for quantity
purchases) less the concession the Sponsor typically allows to brokers and
dealers for purchases (see "Trust Administration--General--Unit
Distribution" ) by (1) investors who purchase Units through registered
investment advisers, certified financial planners and registered
broker-dealers who in each case either charge periodic fees for financial
planning, investment advisory or asset management services, or provide such
services in connection with the establishment of an investment account for
which a comprehensive "wrap fee" charge is imposed, (2) bank trust
departments investing funds over which they exercise exclusive discretionary
investment authority and that are held in a fiduciary, agency, custodial or
similar capacity, (3) any person who for at least 90 days, has been an
officer, director or bona fide employee of any firm offering Units for sale to
investors or their spouses or children and (4) officers and directors of bank
holding companies that make Units available directly or through subsidiaries
or bank affiliates. Notwithstanding anything to the contrary in this
Prospectus, such investors, bank trust departments, firm employees and bank
holding company officers and directors who purchase Units through this program
will not receive sales charge reductions for quantity purchases.
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 a Trust.
The price of the Units as of the opening of business on the date 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 initially equal to 4.712% of such
value for the Select Equity and Treasury Trust, and 5.152% of such value for
the Blue Chip Opportunity and Treasury Trust and dividing the sum so obtained
by the number of Units outstanding. The Public Offering Price shall include
the proportionate share of any cash held in the Capital Account. This
computation produced a gross sales commission initially equal to 4.5% of the
Public Offering Price for the Select Equity and Treasury Trust and 4.9% of the
Public Offering Price for the Blue Chip Opportunity and Treasury Trust. The
Evaluator will appraise or cause to be appraised daily the value of the
underlying Securities as of the close of trading on the New York Stock
Exchange (which is presently 4:00 P.M. New York time) on days the New York
Stock Exchange is open 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 dealer 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 annually, as set
forth in "Summary of Essential Financial Information" in Part One of
this Prospectus, by .3 of 1% to a minimum sales charge of 1.5% in the case of
the Select Equity and Treasury and Blue Chip Opportunity and Treasury Trusts.
The value of the Equity 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 bid prices on the day the valuation is made. The Treasury
Obligations will be valued on the bid prices thereof.
In offering the Units to the public, neither the Sponsor nor any
broker-dealers are recommending any of the individual Securities in the Trust
but rather the entire pool of Securities, taken as a whole, which are
represented by the Units.
Unit Distribution. Units 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 of
70% of the sale charge in connection with the distribution of Units.
Certain commercial banks are making Units of each 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 Units;
however, the Glass-Steagall Act does permit certain agency transactions and
the banking regulators have not indicated that these particular agency
transactions are not permitted under such Act. In addition, state securities
laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 500 Units and 100 Units 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 OfferingGeneral"
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 each 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. 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 its is not obligated to do so, the Sponsor intends to
maintain a market for the Units offered hereby and offer continuously to
purchase Units at prices subject to change at any time, based upon the
aggregate underlying value of the Equity Securities in each Trust plus, in the
case of the Select Equity and Treasury Trust and the Blue Chip Opportunity and
Treasury Trust, the aggregate bid price of the Treasury Obligations. If the
supply of Units exceeds demand or if some other business reason warrants it,
the Sponsor may either discontinue all purchases of Units or discontinue
purchases of Units at such prices. In the event that a market is not
maintained for the Units and the Unitholder cannot find another purchaser, a
Unitholder desiring to dispose of his Units may be able to dispose of such
Units only by tendering them to the Trustee for redemption at the Redemption
Price. See "Rights of UnitholdersRedemption 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 Trusts 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 a Trust may be limited by the plans' provisions and does
not itself establish such plans. The minimum purchase in connection with a
tax-sheltered retirement plan is 100 Units of an individual Trust.
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 each 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 a participant in the Securities Transfer Agents
Medallion Program ("STAMP" ) or such other signature guarantee program
in addition to, or in substitution for STAMP, as may be accepted by the
Trustee. In certain instances the Trustee may require additional documents
such as, but not limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of corporate
authority. Certificates will be issued in denominations of one Unit or any
multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require a
Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or interchange. Destroyed, stolen,
mutilated or lost certificates will be replaced upon delivery to the Trustee
of satisfactory indemnity, evidence of ownership and payment of expenses
incurred. Mutilated certificates must be surrendered to the Trustee for
replacement.
Distributions of Income and Capital. Any dividends received by each Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account. Other receipts (e.g., capital gains, proceeds from the sale of
Securities, return of principal, etc.) are credited to the Capital Account.
The Trustee will distribute any net income other than accreted interest
received with respect to any of the Securities in the Trust on or about the
Income Distribution Dates to Unitholders of record on the preceding Income
Record Dates. See "Summary of Essential Financial Information" in Part
One of the Prospectus. Proceeds received on the sale of any Securities in the
Trust, to the extent not used to meet redemptions of Units or pay expenses,
will be distributed annually on the Capital Account Distribution Date to
Unitholders of record on the preceding Capital Account Record Date. Income
with respect to the original issue discount on the Treasury Obligations will
not be distributed currently, although Unitholders in the Trust will be
subject to federal income tax as if a distribution had occurred. See "
Federal Taxation." Proceeds received from the disposition of any of the
Securities after a record date and prior to the following distribution date
will be held in the Capital Account and not distributed until the next
distribution date applicable to such Capital Account. The Trustee is not
required to pay interest on funds held in the Capital or Income Accounts (but
may itself earn interest thereon and therefore benefits from the use of such
funds).
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 cash in the Income Account after deducting estimated expenses. Because
dividends are not received by the Trusts at a constant rate throughout the
year, such distributions to Unitholders are expected to fluctuate from
distribution to distribution. Persons who purchase Units will commence
receiving distributions only after such person becomes a record owner. A
person will become the owner of Units, and thereby a Unitholder of record, on
the date of settlement provided payment has been received. 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.
On or before the tenth day of each month, the Trustee will deduct from the
Income Account and, to the extent funds are not sufficient therein, from the
Capital Account amounts necessary to pay the expenses of each 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 a Trust. Amounts so withdrawn shall not be considered a part of a
Trust's assets until such time as the Trustee shall return all or any part of
such amounts to the appropriate accounts. In addition, the Trustee may
withdraw from the Income and Capital Accounts such amounts as may be necessary
to cover redemptions of Units.
Reinvestment Option. Unitholders of all unit investment trusts sponsored by
Van Kampen American Capital Distributors, Inc., may elect to have each
distribution of interest income, capital gains and/or principal on their Units
automatically reinvested in shares of any Van Kampen American Capital mutual
funds (except for B shares) which are registered in the Unitholder's state of
residence. Such mutual funds are hereinafter collectively referred to as the
"Reinvestment Funds" .
Each Reinvestment Fund has investment objectives which differ in certain
respects from those of the Trusts. The prospectus relating to each
Reinvestment Fund describes the investment policies of such fund and sets
forth the procedures to follow to commence reinvestment. A Unitholder may
obtain a prospectus for the respective Reinvestment Funds from Van Kampen
American Capital Distributors, Inc. at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181. Texas residents who desire to reinvest may request that a
broker-dealer registered in Texas send the prospectus relating to the
respective fund.
After becoming a participant in a reinvestment plan, each distribution of
interest income, capital gains and/or principal on the participant's Units
will, on the applicable distribution date, automatically be applied, as
directed by such person, as of such distribution date by the Trustee to
purchase shares (or fractions thereof) of the applicable Reinvestment Fund at
a net asset value as computed as of the close of trading on the New York Stock
Exchange on such date. Unitholders with an existing Guaranteed Reinvestment
Option (GRO) Program account (whereby a sales charge is imposed on
distribution reinvestments) may transfer their existing account into a new GRO
account which allows purchases of Reinvestment Fund shares at net asset value
as described above.
Confirmations of all reinvestments by a Unitholder into a Reinvestment Fund
will be mailed to the Unitholder by such Reinvestment Fund. A participant may
at any time prior to five days preceding the next succeeding distribution
date, by so notifying the Trustee in writing, elect to terminate his or her
reinvestment plan and receive future distributions of his or her Units in
cash. There will be no charge or other penalty for such termination. Each
Reinvestment Fund, its sponsor and 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 Sponsor deems it to be
in the best interest of the Unitholders, the accounts of a 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 (including amortization of original
issue discount with respect to the Treasury Obligations in Select Equity and
Treasury Trust and Blue Chip Opportunity and Treasury Trust), deductions for
applicable taxes and for fees and expenses of a 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 related 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 as
total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in a Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its Unit Investment Trust Division, 101 Barclay
Street, 20th Floor, New York, New York 10286 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. No redemption fee will be charged.
On the third business day following such tender the Unitholder will be
entitled to receive in cash (unless the redeeming Unitholder elects an In Kind
Distribution as 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 the close of trading on the New York Stock Exchange (which is currently
4:00 P.M. New York time) 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 5,000 Units or more (2,500 for Blue Chip Opportunity and
Treasury Trust, Series 3) for redemption 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 (and in the case of the Select Equity and
Treasury Trust and the Blue Chip Opportunity and Treasury Trust the pro rata
portion of the Treasury Obligations) 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 a
Trust will be, and the diversity of such Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result
in lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the amount paid by the Unitholder
depending on the value of the Securities in the portfolio at the time of
redemption. Special 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 Equity Securities in each Trust plus the bid price of
the Treasury Obligations, plus or minus cash, if any, in the Income and
Capital Accounts. 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 a
Trust determined on the basis of (i) the cash on hand in such Trust or monies
in the process of being collected and (ii) the value of the Securities in such
Trust, less (a) amounts representing taxes or other governmental charges
payable out of such Trust, (b) any amount owing to the Trustee for its
advances and (c) the accrued expenses of such Trust. The Evaluator may
determine the value of a Securities in a Trust in the following manner: if the
Securities are listed on a national securities exchange, the evaluation will
generally be based on the last available sale price on the exchange (unless
the Evaluator deems the price inappropriate as a basis for evaluation) or, if
there is no last available sale price on the exchange, at the bid prices. See
"Public Offering" for a description of the method of evaluating the
Treasury Obligations in the Select Equity and Treasury Trust and the Blue Chip
Opportunity and Treasury Trust.
As stated above, the Trustee may sell Securities to cover redemptions. When
Securities are sold, the size and the diversity of the Trust will 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 a 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 next
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units would otherwise have been redeemed by
the Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord with
the Public Offering Price described in the then currently effective prospectus
describing such Units. Any profit resulting from the resale of such Units will
belong to the Sponsor which likewise will bear any loss resulting from a lower
offering or redemption price subsequent to its acquisition of such Units.
Portfolio Administration. The portfolios of the Fund are not "managed"
by the Sponsor, Supervisor or the Trustee; their activities described herein
are governed solely by the provisions of the Trust Agreement. The Trust
Agreement provides that the Sponsor may (but need not) direct the Trustee to
dispose of an Equity Security in the event that an issuer defaults in the
payment of a dividend that has been declared, that any action or proceeding
has been instituted restraining the payment of dividends or there exists any
legal question or impediment affecting such Equity Security, that the issuer
of the Equity Security has breached a covenant which would affect the payments
of dividends, the credit standing of the issuer or otherwise impair the sound
investment character of the Equity Security, that the issuer has defaulted on
the payment on any other of its outstanding obligations, that the price of the
Equity Security has declined to such an extent or other such credit factors
exist so that in the opinion of the Sponsor, the retention of such Equity
Securities would be detrimental to a Trust. Treasury Obligations may be sold
by the Trustee only pursuant to the liquidation of a Trust or to meet
redemption requests. Except as stated under "Trust Portfolios General"
for failed securities, the acquisition by the Fund of any securities other
than the Securities is prohibited. Pursuant to the Trust Agreement and with
limited exceptions, the Trustee may sell any securities or other properties
acquired in exchange for Equity Securities such as those acquired in
connection with a merger or other transaction. If offered such new or
exchanged securities or property, the Trustee shall reject the offer. However,
in the event such securities or property are nonetheless acquired by a Trust,
they may be accepted for deposit in such Trust and either sold by the Trustee
or held in such Trust pursuant to the direction of the Sponsor (who may rely
on the advice of the Supervisor). Proceeds from the sale of Securities (or any
securities or other property received by the Fund in exchange for Equity
Securities) are credited to the applicable Capital Account for distribution to
Unitholders or to meet redemptions.
As indicated under "Rights of Unitholders" above, the Trustee may also
sell Securities designated by the Supervisor, or if not so directed, in its
own discretion, for the purpose of redeeming Units of a Trust tendered for
redemption and the payment of expenses; provided, however, that in the case of
Securities sold to meet redemption requests, Treasury Obligations may only be
sold if the Select Equity and Treasury Trust and the Blue Chip Opportunity and
Treasury Trust is assured of retaining a sufficient principal amount of
Treasury Obligations to provide funds upon maturity of such Trust at least
equal to $10.00 per Unit. Treasury Obligations may not be sold by the Trustee
to meet expenses of the Select Equity and Treasury Trust and the Blue Chip
Opportunity and Treasury Trust.
The Supervisor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the number of shares of
individual issues of Equity Securities. To the extent this is not practicable,
the composition and diversity of the Equity Securities may be altered. In
order to obtain the best price for a Trust, it may be necessary for the
Supervisor to specify minimum amounts (generally 100 shares) in which blocks
of Equity Securities are to be sold.
Amendment or Termination. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders, (as determined in good faith by the Sponsor
and the Trustee) provided, however, that the Trust Agreement may not be
amended to increase the number of Units. 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 a Trust of any Unitholder without the consent of such Unitholder
or reduce the percentage of Units required to consent to any such amendment or
waiver without the consent of all Unitholders. The Trustee shall advise the
Unitholders of any amendment promptly after execution thereof.
A Trust may be liquidated (1) at any time by consent of Unitholders
representing 100% of the Units then outstanding or (2) by the Trustee when the
value of such Trust, as shown by any evaluation, is less than that indicated
under "Summary of Essential Financial Information" in Part One of the
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.
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trusts. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. Written notice of any termination specifying the time or times at
which Unitholders may surrender their certificates for cancellation, if any
are then issued and outstanding, shall be given by the Trustee to each
Unitholder so holding a certificate at his address appearing on the
registration books of the Fund maintained by the Trustee. At least 30 days
before the Mandatory Termination Date the Trustee will provide written notice
thereof to all Unitholders and will include with such notice a form to enable
Unitholders owning the applicable number of Units of a Trust to request an In
Kind Distribution rather than payment in cash upon the termination of the
related 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 Equity Securities in the related
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 of the Equity Securities and the pro rata portion of the
Treasury Obligations will be paid in cash. Unitholders not requesting 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 each Trust any accrued costs, expenses, advances or
indemnities provided by the Trust Agreement, including estimated compensation
of the Trustee, costs of liquidation and any amounts required as a reserve to
provide for payment of any applicable taxes or other governmental charges. Any
sale of Equity Securities in a Trust upon termination may result in a lower
amount than might otherwise be realized if such sale were not required at such
time. The Trustee will then distribute to each Unitholder his pro rata share
of the balance of the Income and Capital Accounts.
Within 60 days of the final distribution, 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 gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder. The Trustee shall not be
liable for depreciation or loss incurred by reason of the sale by the Trustee
of any of the Securities. In the event of the failure of the Sponsor to act
under the Trust Agreement, the Trustee may act thereunder and shall not be
liable for any action taken by it in good faith under the Trust Agreement.
The Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or upon the interest thereon or
upon it as Trustee under the Trust Agreement or upon or in respect of a Trust
which the Trustee may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be
made in good faith upon the basis of the best information available to it,
provided, however, that the Evaluator shall be under no liability to the
Trustee, Sponsor or Unitholders for errors in judgment. This provision shall
not protect the Evaluator in any case of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. The Sponsor is an indirect
subsidiary of VK/AC Holding, Inc. Prior to October 31, 1996, VK/AC Holding,
Inc. was controlled, through the ownership of a substantial majority of its
common stock, by The Clayton & Dubilier Private Equity IV Limited Partnership.
On October 31, 1996, VK/AC Holding, Inc. became a wholly owned indirect
subsidiary of Morgan Stanley Group Inc. pursuant to the closing of an
Agreement and Plan of Merger among Morgan Stanley Group Inc., MSAM Holdings
II, Inc. and MSAM Acquisition Inc., whereby MSAM Acquisition Inc. was merged
with and into VK/AC Holding, Inc. and VK/AC Holding, Inc. was the surviving
corporation (the "Acquisition" ).
As a result of the Acquisition, VK/AC Holding, Inc. became a wholly owned
subsidiary of MSAM Holdings II, Inc. which, in turn, is a wholly owned
subsidiary of Morgan Stanley Group Inc. Morgan Stanley Group Inc. and various
of its directly or indirectly owned subsidiaries, including Morgan Stanley
Asset Management Inc., an investment adviser (MSAM" ), Morgan Stanley & Co.
Incorporated, a registered broker-dealer and investment adviser, and Morgan
Stanley International, are engaged in a wide range of financial services.
Their principal businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring and other corporate finance
advisory activities; merchant banking; stock brokerage and research services;
asset management; trading of futures, options, foreign exchange commodities
and swaps (involving foreign exchange, commodities, indices and interest
rates); real estate advice, financing and investing; and global custody,
securities clearance services and securities lending. As of September 30,
1996, MSAM, together with its affiliated investment advisory companies, had
approximately $103.5 billion of assets under management and fiduciary advice.
On February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover & Co.
announced that they had entered into an Agreement and Plan of Merger to form
Morgan Stanley, Dean Witter, Discover & Co. Subject to certain conditions
being met, it is currently anticipated that the transaction will close in
mid-1997. Thereafter, Van Kampen American Capital Distributors, Inc. will be
an indirect subsidiary of Morgan Stanley, Dean Witter, Discover & Co.
Dean Witter, Discover & Co. is a financial services company with three major
businesses: full service brokerage, credit services and asset management.
Van Kampen American Capital Distributors, Inc. specializes in the underwriting
and distribution of unit investment trusts and mutual funds with roots in
money management dating back to 1926. The Sponsor is a member of the National
Association of Securities Dealers, Inc. and has offices at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, (630) 684-6000 and 2800 Post Oak Boulevard,
Houston, Texas 77056, (713) 993-0500. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco, Seattle and Tampa. As of November 30, 1996, the total
stockholders' equity of Van Kampen American Capital Distributors, Inc. was
$129,451,000 (unaudited). (This paragraph relates only to the Sponsor and not
to the Trust or to any other Series thereof. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
As of December 31, 1996, the Sponsor and its Van Kampen American Capital
affiliates managed or supervised approximately $59 billion of investment
products, of which over $11.88 billion is invested in municipal securities.
The Sponsor and its Van Kampen American Capital affiliates managed $48 billion
of assets, consisting of $29.9 billion for 59 open end mutual funds (of which
46 are distributed by Van Kampen American Capital Distributors, Inc.), $13.1
billion for 38 closed-end funds and $4.99 billion for 106 institutional
accounts. The Sponsor has also deposited approximately $26 billion of unit
investment trusts. All of Van Kampen American Capital's open-end funds,
closed-end funds and unit investment trusts are professionally distributed by
leading financial firms nationwide. Based on cumulative assets deposited, the
Sponsor believes that it is the largest sponsor of insured municipal unit
investment trusts, primarily through the success of its Insured Municipals
Income Trust(R)or the IM-IT(R)trust. The Sponsor also provides
surveillance and evaluation services at cost for approximately $13 billion of
unit investment trust assets outstanding. Since 1976, the Sponsor has serviced
over two million investor accounts, opened through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or 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 Unit Investment Trust
Division offices at 101 Barclay Street, New York, New York 10286 (800)
221-7668. The Bank of New York is subject to supervision and examination by
the Superintendent of 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 portfolios.
In accordance with the Trust Agreement, the Trustee shall keep proper books of
record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder of such 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 UnitholdersReports Provided" ). The
Trustee is required to keep a certified copy or duplicate original of the
Trust Agreement on file in its office available for inspection at all
reasonable times during the usual business hours by any Unitholder, together
with a current list of the Securities held in each Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign and
be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date
specified in such notice when such resignation is to take effect. The Sponsor
upon receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus, and undivided
profits of not less than $5,000,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor.
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 LLP, 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.
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>
<CAPTION>
Table of Contents Page
<S> <C>
The Trusts............................ 2
Objectives and Securities Selection... 2
Trust Portfolios...................... 3
Risk Factors.......................... 3
Federal Taxation...................... 4
Trust Operating Expenses.............. 6
Public Offering....................... 6
Rights of Unitholders................. 7
Trust Administration.................. 9
Other Matters......................... 11
</TABLE>
This Prospectus does not contain all the information set forth in the
registration statements and exhibits relating thereto, which the Fund has
filed with 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 SELECT EQUITY AND TREASURY TRUST AND
VAN KAMPEN MERRITT BLUE CHIP OPPORTUNITY AND TREASURY 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 One accompanying this Prospectus
Part Two.
Sponsor: VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
2800 Post Oak Boulevard
Houston, Texas 77056
A Wealth of Knowledge A Knowledge of Wealth
VAN KAMPEN AMERICAN CAPITAL
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 Equity Opportunity Trust, Series 3,
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 24th
day of April, 1997.
Van Kampen Merritt Equity Opportunity Trust,
Series 3
(Registrant)
By Van Kampen American Capital Distributors,
Inc.
(Depositor)
By: Sandra A. Waterworth
Vice President
(Seal)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below on
April 24, 1997 by the following persons who constitute a majority of the
Board of Directors of Van Kampen American Capital Distributors, Inc.:
Signature Title
Don G. Powell Chairman and Chief )
Executive Officer )
William R. Molinari President and Chief Operating )
Officer )
Ronald A. Nyberg Executive Vice President and )
General Counsel )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
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 and Investors' Quality Tax-Exempt Trust, Multi-Series 203
(File No. 33-65744) and with the Registration Statement on Form S-6
of Insured Municipals Income Trust, 170th Insured Multi-Series (File
No. 33-55891) and the same are hereby incorporated herein by this
reference.
Consent of Independent Certified Public Accountants
We have issued our report dated March 21, 1997 accompanying the
financial statements of Van Kampen Merritt Equity Opportunity Trust,
Series 3 as of December 31, 1996, and for the period then ended,
contained in this Post-Effective Amendment No. 4 to Form S-6.
We consent to the use of the aforementioned report in the Post-
Effective Amendment and to the use of our name as it appears under the
caption "Auditors".
Grant Thornton LLP
Chicago, Illinois
April 24, 1997
<TABLE> <S> <C>
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<NUMBER> 2
<NAME> BCAT
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 11505655
<INVESTMENTS-AT-VALUE> 13133119
<RECEIVABLES> 0
<ASSETS-OTHER> 8687
<OTHER-ITEMS-ASSETS> 8390
<TOTAL-ASSETS> 13150196
<PAYABLE-FOR-SECURITIES> 3814
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 3814
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13146382
<SHARES-COMMON-STOCK> 960499
<SHARES-COMMON-PRIOR> 1111454
<ACCUMULATED-NII-CURRENT> 2617514
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 712062
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1627464
<NET-ASSETS> 13146382
<DIVIDEND-INCOME> 95119
<INTEREST-INCOME> 593872
<OTHER-INCOME> 0
<EXPENSES-NET> 17185
<NET-INVESTMENT-INCOME> 671806
<REALIZED-GAINS-CURRENT> (30199)
<APPREC-INCREASE-CURRENT> 348420
<NET-CHANGE-FROM-OPS> 990027
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (74257)
<DISTRIBUTIONS-OF-GAINS> (30199)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 150955
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1031719)
<ACCUMULATED-NII-PRIOR> 2019965
<ACCUMULATED-GAINS-PRIOR> 742261
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2790
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 17185
<AVERAGE-NET-ASSETS> 13662242
<PER-SHARE-NAV-BEGIN> 12.86
<PER-SHARE-NII> 0.699
<PER-SHARE-GAIN-APPREC> 0.331
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.687
<EXPENSE-RATIO> 0.001
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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