File No. 33-52185
CIK #896966
Securities and Exchange Commission
Washington, D.C. 20549-1004
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: Van Kampen Merritt Equity Opportunity
Trust, Series 7
B. Name of Depositor: Van Kampen Merritt Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler Van Kampen Merritt Inc.
Attention: Mark J. Kneedy Attention: John C. Merritt,
Chairman
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: An indefinite
number of Units of proportionate interest pursuant to Rule 24f-2
under the Investment Company Act of 1940
F. Proposed maximum offering price to the public of the securities
being registered: Indefinite
G. Amount of registration fee: $500 (previously paid)
H. Approximate date of proposed sale to the public:
As Soon As Practicable After the Effective Date of the
Registration Statement
/ / Check box if it is proposed that this filing will become effective
on pursuant to Rule 487.
The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a) may determine.
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
Van Kampen Merritt Equity Opportunity Trust
Series 7
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of Fund ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Fund Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Fund Administration
4. Name and address of principal ) Underwriting
underwriter
5. Organization of trust ) The Fund
6. Execution and termination of ) The Fund
Trust Indenture and Agreement ) Fund Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and
Securities of the Trust
10. General information regarding ) The Fund
trust's securities and ) Taxation
rights of security holders ) Public Offering
) Rights of Unitholders
) Fund Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Fund
) Trust Portfolios
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges ) Prospectus Front Cover Page
and expenses )
) Summary of Essential Financial
) Information
) Trust Portfolios
)
) Trust Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information )
regarding periodic ) *
payment plan certificates)
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
)
) Public Offering
) Rights of Unitholders
(d) Certain other fees, ) Fund Operating Expenses
expenses or charges ) Rights of Unitholders
payable by holders )
(e) Certain profits to be ) Public Offering
received by depositor, ) Underwriting
principal underwriter, ) Trust Portfolios
trustee or any affiliated)
persons
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Rights of Unitholders
15. Receipt and handling of payments) *
from purchasers )
16. Acquisition and disposition of ) The Fund
underlying securities ) Rights of Unitholders
) Fund Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Fund Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of ) *
distributions
(c) Reserves or special funds ) Fund Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Fund Administration
20. Certain miscellaneous provisions) Fund Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolios
) Fund Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. Organization, Personnel and Affiliated
Persons of Depositor
25. Organization of Depositor ) Fund Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Fund Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. Distribution and Redemption of Securities
35. Distribution of trust's ) Public Offering
securities by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Fund Administration
underwriter )
(b) Branch offices or principal) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal )
underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Fund Operating Expenses
) Public Offering
(b) Schedule as to offering ) *
price )
(c) Variation in offering price) *
to certain persons )
46. (a) Redemption valuation ) Rights of Unitholders
) Fund Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Fund Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Fund Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Fund Operating Expenses
50. Trustee's lien ) Fund Operating Expenses
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's ) Cover Page
securities ) Fund Operating Expenses
52. (a) Provisions of trust )
agreement with respect to) Fund Administration
replacement or )
elimination portfolio )
securities )
(b) Transactions involving )
elimination of underlying) *
securities )
(c) Policy regarding )
substitution or ) Fund Administration
elimination of underlying)
securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Taxation
VII. Financial and Statistical Information
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates )
58. )
59. Financial statements ) Report of Independent Certified
(Instructions 1(c) to Form S-6)) Public Accountants
) Statements of Condition
______________________________________________
* Inapplicable, omitted, answer negative or not required
PRELIMINARY PROSPECTUS DATED FEBRUARY 28, 1994
SUBJECT TO COMPLETION
March , 1994
LOGO
VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST, SERIES 7
STRATEGIC TEN TRUST
United States Portfolio, Series 1
United Kingdom Portfolio, Series 1
Hong Kong Portfolio, Series 1
- ------------------------------------------------------------------------------
THE FUND. Van Kampen Merritt Equity Opportunity Trust, Series 7 (the "Fund")
is comprised of three underlying separate unit investment trusts designated as
Strategic Ten Trust United States Portfolio, Series 1 (the "United States
Trust"), Strategic Ten Trust United Kingdom Portfolio, Series 1 (the "United
Kingdom Trust"), and Strategic Ten Trust Hong Kong Portfolio, Series 1 (the
"Hong Kong Trust"). The various trusts are collectively referred to herein as
the "Trusts" and are individually referred to herein as a "Trust". The United
Kingdom and Hong Kong Trusts are sometimes collectively referred to herein as
the "Foreign Trusts". The Trusts offer investors the opportunity to purchase
Units representing proportionate
interests in a fixed, diversified portfolio of
actively traded equity securities, including common stocks of foreign issuers.
The United States Trust consists of common stocks of the ten companies in the
Dow Jones Industrial Average* having the
highest dividend yield as of the close
of business three days prior to the
Initial Date of Deposit. The United Kingdom
Trust consists of common stocks of the ten companies in the Financial Times
Industrial Ordinary Share Index* (the "FT Index") having the highest dividend
yield as of the close of business three days prior to the Initial Date of
Deposit. The Hong Kong Trust consists of common stocks of the ten companies in
the Hang Seng Index* having the highest dividend yield as of the close of
business three days prior to the Initial Date of Deposit. The publishers of
these indexes have not participated in
any way in the creation of the Trusts or
in the selection of stocks included in the Trusts and have not approved any
information herein relating thereto.
Unless terminated earlier, the Trusts will
terminate on April 25, 1995 and any securities then held will, within a
reasonable time thereafter, be liquidated or distributed by the Trustee. Any
Securities liquidated at termination will be sold at the then current market
value for such Securities; therefore, the amount distributable in cash to a
Unitholder upon termination may be more
or less than the amount such Unitholder
paid for his Units. Upon liquidation,
Unitholders may choose either to reinvest
their proceeds into the next Strategic Ten Series, if available, at a reduced
sales charge or to receive a cash distribution, or, in the case of the United
States Trust, to receive a pro rata distribution of the securities then
included in such Trust (if they own the requisite number of Units).
Unless otherwise indicated, all
amounts herein are stated in U.S. dollars. In
the case of the United Kingdom and Hong
Kong Trusts, these amounts are computed
on the basis of the exchange rate for British pounds sterling or Hong Kong
dollars, as applicable, on the day before the Initial Date of Deposit.
- ------
* The publishers of these indexes have
not granted to the Fund or the Sponsor a
license to use these indexes and are not affiliated with the Sponsor.
- -----------------------------------------------------------------------------
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.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY STATE.
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
OBJECTIVE OF THE FUND. The objective of each Trust is to provide an above
average total return through a combination of potential capital appreciation
and dividend income, consistent with the preservation of invested capital, by
investing in a portfolio of actively traded equity securities at the Initial
Date of Deposit having the highest dividend yield in their respective stock
exchange index ("Equity Securities" or "Securities"). See "Portfolios." Each
Trust seeks to achieve better performance than the relevant index for such
Trust. There is, of course, no guarantee
that the objective of the Fund will be
achieved.
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 or minus cash, if any, in the Capital and Income Accounts of such Trust,
divided by the number of Units of such Trust outstanding, plus a sales charge
equal to 3.5% of the Public Offering
Price which is equivalent to 3.627% of the
aggregate value of the Securities in such Trust. In the case of the United
Kingdom and Hong Kong Trusts, the Public Offering Price per Unit is based on
the aggregate value of the Securities computed on the basis of the offering
side value of the relevant currency exchange rate expressed in U.S. dollars
during the initial offering period and on the bid side value for the secondary
market transactions. During the initial offering period, the sales charge is
reduced on a graduated scale for sales involving at least 10,000 Units of a
Trust. If Units were available for purchase at the opening of business on the
Initial Date of Deposit, the Public Offering Price per Unit for each Trust
would have been that amount set forth under "Summary of Essential Financial
Information." The minimum purchase is 500 Units (100 Units for a tax-sheltered
retirement plan). See "Public Offering."
ADDITIONAL DEPOSITS. The Sponsor may,
from time to time during a period of up
to two months after the Initial Date of Deposit, deposit additional Securities
in the Trusts, provided it maintains, as
nearly as is practicable, the original
proportionate relationship of the Equity Securities in each Trust's portfolio.
See "The Fund."
DIVIDEND AND CAPITAL GAINS DISTRIBUTIONS. Distributions of dividends
received, and realized capital gains, if any, received by a Trust will be paid
in cash on the applicable Distribution Date to Unitholders of record of such
Trust on the record date as set forth in the "Summary of Essential Financial
Information." The initial estimated distribution for each Trust will be that
amount set forth under "Summary of Essential Financial Information", and will
be made on October 31, 1994 to Unitholders of record on October 15, 1994. Any
distribution of income and/or capital gains for a Trust will be net of the
expenses of such Trust. See "Taxation." Additionally, upon termination of a
Trust, the Trustee will distribute, upon surrender of Units for redemption, to
each Unitholder his pro rata share of such Trust's assets, less expenses, in
the manner set forth under "Rights of Unitholders--Distributions of Income and
Capital."
SECONDARY MARKET FOR UNITS. Although not obligated to do so, the Sponsor
currently intends to maintain a market for Units of the Trusts through October
15, 1994 and offer to repurchase such Units at prices which are based on the
aggregate underlying value of Equity Securities in the Trusts (generally
determined by the closing sale prices of
the Securities) plus or minus cash, if
any, in the Capital and Income Accounts
of the Trusts. If a secondary market is
not maintained, a Unitholder may redeem Units through redemption at prices
based upon the aggregate underlying value of the Equity Securities in the
Trusts plus or minus a pro rata share of cash, if any, in the Capital and
Income Accounts of the Trusts. See "Rights of Unitholders--Redemption of
Units."
A Unitholder in the United States Trust tendering 2,500 or more Units for
redemption may request a distribution of shares of Securities (reduced by
customary transfer and registration charges) in lieu of payment in cash. See
"Rights of Unitholders--Redemption of Units."
TERMINATION. The Fund will terminate
approximately one year after the Initial
Date of Deposit regardless of market
conditions at that time. Commencing on the
Mandatory Termination Date, Securities will begin to be
2
<PAGE>
sold in connection with the termination of the Trusts. The Sponsor will
determine the manner, timing and execution of the sale of the Securities.
Written notice of any termination of the Trusts shall be given by the Trustee
to each Unitholder at his address appearing on the registration books of the
Trusts maintained by the Trustee. At least 30 days prior to the Mandatory
Termination Date the Trustee will provide written notice thereof to all
Unitholders and in the case of the United States Trust will include with such
notice a form to enable Unitholders of such Trust to elect a distribution of
shares of the Securities (reduced by customary transfer and registration
charges) if such Unitholder owns at least 2,500 Units of the United States
Trust, rather than to receive payment in cash for such Unitholder's pro rata
share of the amounts realized upon the disposition of such Securities.
Unitholders will receive cash in lieu of any fractional shares. To be
effective, the election form, and any other documentation required by the
Trustee, must be returned to the Trustee at least five business days prior to
the Mandatory Termination Date. Unitholders of each of the Trusts may elect to
become Rollover Unitholders as described
in "Special Redemption and Rollover in
New Fund" below. Rollover Unitholders will not receive the final liquidation
distribution but will receive units in a new Series of Strategic Ten Trust, if
one is being offered. Unitholders not electing the Rollover Option or a
distribution of shares of Securities (in the case of the United States Trust)
will receive a cash distribution from the sale of the remaining Securities
within a reasonable time after the Trusts are terminated. See "Fund
Administration--Amendment or Termination."
REINVESTMENT OPTION. Unitholders have the opportunity to have their
distributions reinvested into an open-end management investment company. See
"Rights of Unitholders--Reinvestment Option."
SPECIAL REDEMPTION AND ROLLOVER IN NEW FUND. Unitholders will have the
option, subject to any necessary regulatory approval, of specifying by the
Rollover Notification Date stated in "Summary of Essential Financial
Information" to have all of their Units redeemed on the Rollover Notification
Date and the distributed Securities sold by the Trustee, in its capacity as
Distribution Agent, during the Special Redemption and Rollover Period.
(Unitholders so electing are referred to
herein as "Rollover Unitholders.") The
Distribution Agent will appoint the Sponsor as its agent to determine the
manner, timing and execution of sales of
underlying Securities. The proceeds of
the redemption will then be invested in Units of a new Series of the Strategic
Ten Trust (the "1995 Fund"), if one is offered, at a reduced sales charge
(anticipated to be 1.9% of the public offering price of the 1995 Fund). The
Sponsor may, however, stop offering units of the 1995 Fund at any time in its
sole discretion without regard to whether all the proceeds to be invested have
been invested. Cash which has not been invested on behalf of the Rollover
Unitholders in the 1995 Fund will be distributed at the end of the Special
Redemption and Rollover Period. However, the Sponsor anticipates that
sufficient Units will be available, although moneys in this Fund may not be
fully invested on the next business day. The portfolios of the 1995 Fund will
contain the ten common stocks in each of the Dow Jones Industrial Average, FT
Index, and Hang Seng Index having the highest dividend yield as of a day
shortly prior to the initial date of deposit of the 1995 Fund. Rollover
Unitholders will receive the amount of dividends in the applicable Income
Account of each Trust, which will be included in the reinvestment in units of
the 1995 Fund.
RISK FACTORS. For certain risk considerations related to the Trusts, see
"Risk Factors."
3
<PAGE>
<TABLE>
VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST, SERIES 7
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
AS OF THE OPENING OF BUSINESS ON THE INITIAL DATE OF DEPOSIT: MARCH , 1994
SPONSOR: VAN KAMPEN MERRITT INC.
SUPERVISOR: VAN KAMPEN MERRITT INVESTMENT ADVISORY CORP.
(A SUBSIDIARY OF THE SPONSOR)
EVALUATOR: AMERICAN PORTFOLIO EVALUATION SERVICES (FOR THE
UNITED STATES TRUST)
(A DIVISION OF A SUBSIDIARY OF THE SPONSOR)
(FOR THE FOREIGN TRUSTS)
TRUSTEE: THE BANK OF NEW YORK
<CAPTION>
UNITED UNITED HONG
STATES KINGDOM KONG
GENERAL INFORMATION TRUST TRUST TRUST
- ------------------- --------- ------- ------
<S> <C> <C> <C>
Number of Units.................................................
Fractional Undivided Interest in the Trust per Unit............. 1/ 1/ 1/
Public Offering Price:
Aggregate Value of Securities in Portfolio (1).................. $ $ $
Aggregate Value of Securities per Unit.......................... $ $ $
Sales Charge 3.5% (3.627% of the Aggregate Value of
Securities per Unit)........................................... $ $ $
Public Offering Price per Unit (2)(3)........................... $ $ $
Redemption Price per Unit(4).................................... $ $ $
Initial Secondary Market Repurchase Price per Unit.............. $ $ $
Excess of Public Offering Price per Unit over Redemp-
tion Price per Unit............................................ $ $ $
Calculation of Estimated Net Annual Dividends per Unit (5):
Estimated Gross Annual Dividends per Unit..................... $ $ $
Less: Estimated Annual Expense per Unit....................... $ $ $
Estimated Net Annual Dividends per Unit....................... $ $ $
Supervisor's Annual Supervisory Fee......... Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee........... Maximum of $.0025 per Unit
Rollover Notification Date.................. , 1995
Special Redemption Period................... Beginning on , 1995 until no later than , 1995
Mandatory Termination Date.................. April 18, 1995
Minimum Termination Value................... Each Trust may be terminated if the net asset
value of such Trust is less than $500,000
unless the net asset value of such Trust's
deposits has exceeded $15,000,000, then the
Trust Agreement may be terminated if the net
asset value of the Trust is less than
$3,000,000.
Trustee's Annual Fee....................... $.008 per Unit
Income and Capital Account Distribu-
tion Record Dates......................... October 15, 1994 and April 24, 1995
Income and Capital Account Distribu-
tion Dates................................ October 31, 1994 and April 30, 1995
Evaluation Time............................ Close of the relevant stock market (currently 4:00 P.M.
New York time for the United States Trust, 11:30 A.M.
New York time for the United Kingdom Trust and 3:30 A.M.
New York time for the Hong Kong Trust)
<FN>
<F1>Each Equity Security is valued at the closing sale price. The aggregate
value of Securities in each of the United Kingdom and Hong Kong Trusts
represents the U.S. dollar value based on the offering side value of the
currency exchange rates for the British pound sterling and the Hong Kong
dollar, as applicable, at the relevant Evaluation Time on the date of this
"Summary of Essential Financial Information" and includes the commissions
and stamp taxes associated with acquiring such Securities.
<F2>On the Initial Date of Deposit there will be no cash in the Income or
Capital Accounts. Anyone ordering Units after such date will have included
in the Public Offering Price a pro rata share of any cash in such
Accounts. In the case of the United Kingdom and Hong Kong Trusts, the
Public Offering Price per Unit is based on the aggregate value of the
Securities computed on the basis of the offering side value of the
relevant currency exchange rate expressed in U.S. dollars and includes the
commissions and stamp taxes associated with acquiring such Securities.
<F3>Effective on various dates the secondary market sales charge will
decrease. See "Public Offering-- Offering Price."
<F4>In the case of the United Kingdom and Hong Kong Trusts, the Redemption
Price per Unit is based on the aggregate value of the Securities computed
on the basis of the bid side value of the relevant currency exchange rate
expressed in U.S. dollars and includes each Trust's estimated costs of
liquidating Securities to meet redemptions ($ and $ per Unit for
the United Kingdom Trust and Hong Kong Trust, respectively).
<F5>Estimated annual dividends are based on the most recently paid dividends
or, in the case of the United Kingdom and Hong Kong Trusts, on the most
recent interim and final dividends.
</TABLE>
4
<PAGE>
THE FUND
- -----------------------------------------------------------------------------
Van Kampen Merritt Equity Opportunity Trust, Series 7 is comprised of three
unit investment trusts, Strategic Ten Trust United States Portfolio, Series 1,
Strategic Ten Trust United Kingdom
Portfolio, Series 1, and Strategic Ten Trust
Hong Kong Portfolio, Series 1. The Fund
was created under the laws of the State
of New York pursuant to a Trust Indenture and Trust Agreement (the "Trust
Agreement"), dated the date of this
Prospectus (the "Initial Date of Deposit"),
among Van Kampen Merritt Inc., as Sponsor, Van Kampen Merritt Investment
Advisory Corp., as Supervisor, The Bank of New York, as Trustee, and American
Portfolio Evaluation Services, a division of Van Kampen Merritt Investment
Advisory Corp., as Evaluator.
The Fund offers investors the opportunity to purchase Units representing
proportionate interests in portfolios of actively traded equity securities
which are components of the Dow Jones Industrial Average, the FT Index, or the
Hang Seng Index. The Trusts consist of common stocks of the ten companies in
these indexes having the highest dividend yield as of the close of business
three days prior to the Initial Date of Deposit. This yield is historical and
there is no assurance that any dividends
will be declared or paid in the future
on the Securities in the Trusts. See "Risk Factors." Investors should be aware
that at the present time each Trust may not invest more than 5% of its assets
in the stocks of any issuer that derives more than 15% of its revenues from
securities-related activities and that, therefore, the Trusts will not be able
to invest an equal amount in each of the
selected stocks. The publishers of the
Dow Jones Industrial Average, FT Index, and Hang Seng Index have not
participated in any way in the creation of the Fund or in selection of the
stocks included in the Trusts and have not approved any information herein
relating thereto. The Fund may be an appropriate medium for investors who
desire to participate in portfolios of common stocks with greater
diversification than they might be able to acquire individually and who are
seeking to achieve a better performance than the related indexes through an
investment in the highest dividend yielding stock of these indexes. An
investment in approximately equal values of such stocks each year has in most
instances provided a higher total return than investments in all of the stocks
which are components of the respective indexes. See "Trust Portfolios." Unless
terminated earlier, the Trusts will
terminate on the Mandatory Termination Date
set forth under "Summary of Essential
Financial Information" and any securities
then held will, within a reasonable time thereafter, be liquidated or
distributed by the Trustee. Any Securities liquidated at termination will be
sold at the then current market value for such Securities; therefore, the
amount distributable in cash to a Unitholder upon termination may be more or
less than the amount such Unitholder paid for his Units. Upon liquidation,
Unitholders may choose either to reinvest their proceeds into their respective
Series of the next Series of Strategic Ten Trust, if available, at a reduced
sales charge, to receive (in the case of the United States Trust) a pro rata
distribution of the Securities then included in such Trust (if they own the
requisite minimum number of Units) or to receive a cash distribution.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities indicated under "Portfolios" herein, including delivery statements
relating to contracts for the purchase of certain such Securities and an
irrevocable letter of credit issued by a financial institution in the amount
required for such purchases. Thereafter, the Trustee, in exchange for such
Securities (and contracts) so deposited,
delivered to the Sponsor documentation
evidencing the ownership of that number of Units of the Trusts indicated in
"Summary of Essential Financial Information." Unless otherwise terminated as
provided in the Trust Agreement, the Trusts will terminate on the Mandatory
Termination Date, and Securities then held will within a reasonable time
thereafter be liquidated or distributed by the Trustee.
Additional Units of the Trusts may be
issued at any time by depositing in the
Trusts additional Securities or contracts to purchase securities together with
irrevocable letters of credit or cash. As additional Units are issued by the
Trusts as a result of the deposit of additional Securities by the Sponsor, the
aggregate value of the Securities in the Trusts will be increased and the
fractional undivided interest in the Trusts represented by
5
<PAGE>
each Unit will be decreased. The Sponsor may continue to make additional
deposits of Securities into the Trusts for a period of up to two months
following the Initial Date of Deposit, provided that such additional deposits
will be in amounts which will maintain, as nearly as practicable, the original
proportionate relationship of the Equity Securities in each Trust's portfolio
based on the number of shares of the Equity Securities. Any deposit by the
Sponsor of additional Equity Securities will duplicate, as nearly as is
practicable, this original proportionate relationship and not the actual
proportionate relationship on the subsequent date of deposit, since the actual
proportionate relationship may be different than the original proportionate
relationship. Any such difference may be due to the sale, redemption or
liquidation of any of the Equity Securities deposited in the Trusts on the
Initial, or any subsequent, Date of Deposit.
Each Unit of the Trusts initially
offered represents an undivided interest in
each Trust. To the extent that any Units are redeemed by the Trustee or
additional Units are issued as a result of additional Securities being
deposited by the Sponsor, the fractional undivided interest in the Trusts
represented by each unredeemed Unit will increase or decrease accordingly,
although the actual interest in the Trusts represented by such fraction will
remain unchanged. Units will remain outstanding until redeemed upon tender to
the Trustee by Unitholders, which may include the Sponsor, or until the
termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
- -----------------------------------------------------------------------------
The objective of the Fund is to
provide an above average total return through
a combination of potential capital appreciation and dividend income by
investing in a portfolio of common
stocks of the ten companies in the Dow Jones
Industrial Average, FT Index, and Hang Seng Index, respectively, having the
highest dividend yield as of the close of business three days prior to the
Initial Date of Deposit. The Fund will terminate approximately one year from
the date of this Prospectus. The companies represented in the Trusts are some
of the most well-known and highly capitalized companies in the United States,
the United Kingdom and Hong Kong. An investment in approximately equal values
of the ten highest yielding stocks in the Dow Jones Industrial Average would
have, in 15 of the last 20 years, yielded a higher total return than an
investment in all of the stocks comprising the Dow Jones Industrial Average. A
similar investment in the ten highest yielding stocks in the FT Index would
have, in 16 of the last 20 years, yielded a higher total return than an
investment in all of the stocks
comprising the FT Index. Furthermore, a similar
investment in the ten highest yielding stocks in the Hang Seng Index for a
period of one year would have, in 10 of the last 16 years, yielded a higher
total return than an investment in all of the stocks comprising the Hang Seng
Index. See the table entitled "Comparison of Dividends, Appreciation and Total
Returns" for the applicable Trust under "Trust Portfolios." The Trusts seek to
achieve better performances than the
related indexes through similar investment
strategy. Investment in a number of
companies having high dividends relative to
their stock prices (usually because their stock prices are undervalued) is
designed to increase each Trust's potential for higher returns. There is, of
course, no assurance that a Trust (which includes expenses and sales charges)
will achieve its objective.
Investors will be subject to taxation on the dividend income received by the
Trusts and on gains from the sale or liquidation of Securities. The tax
consequences affecting Unitholders will vary in each of the respective Trusts
(see "Taxation"). Investors should be aware that there is not any guarantee
that the objective of the Trusts will be achieved because it is subject to the
continuing ability of the respective issuers to declare and pay dividends and
because the market value of the Securities can be affected by a variety of
factors. Common stocks may be especially susceptible to general stock market
movements and to volatile increases and
decreases of value as market confidence
in and perceptions of the issuers change. Investors should be aware
6
<PAGE>
that there can be no assurance that the
value of the underlying Securities will
increase or that the issuers of the Securities will pay dividends on
outstanding common shares. Any distribution of income will generally depend
upon the declaration of dividends by the issuers of the Securities and the
declaration of any dividends depends upon several factors including the
financial condition of the issuers and general economic conditions. In
addition, a decrease in the value of the British pound sterling or Hong Kong
dollar relative to the U.S. dollar will adversely affect the value of the
relevant Trust's assets and income and the value of the Units of that Trust.
See "Risk Factors."
Investors should note that the above criteria were applied to the Securities
for inclusion in the Trusts as of the Initial Date of Deposit. Subsequent to
the Initial Date of Deposit, the Securities may no longer be included in the
Dow Jones Industrial Average, FT Index, or Hang Seng Index or may not be
providing one of the ten highest
dividend yields within these indexes. Should a
Security no longer be included in these indexes or not be one of the ten
highest in dividend yield, such Security will not as a result thereof be
removed from a Trust portfolio.
Investors should be aware that the Fund is not a "managed" fund and as a
result the adverse financial condition of a company will not result in its
elimination from the portfolio except under extraordinary circumstances (see
"Fund Administration--Portfolio Administration"). In addition, Securities will
not be sold by a Trust to take advantage of market fluctuations or changes in
anticipated rates of appreciation.
Investors should note in particular that the
Securities were selected by the Sponsor three days prior to the date the
Securities were purchased by the Trusts. The Trusts may continue to hold
Securities originally selected through this process even though the evaluation
of the attractiveness of the Securities
may have changed and, if the evaluation
were performed again at that time, the
Securities would not be selected for the
Trusts.
TRUST PORTFOLIOS
- -----------------------------------------------------------------------------
Each Trust consists of ten common
stocks of the respective indices having the
highest dividend yield as of the close of business three days prior to the
Initial Date of Deposit. In the case of the United States Trust, the yield for
each Equity Security was calculated by annualizing the last dividend paid and
dividing the result by the market value of the Equity Security as of the close
of business on the day prior to the
Initial Date of Deposit. In the case of the
United Kingdom Trust and the Hong Kong Trust, the yield for each Equity
Security was calculated by adding
together the most recent interim dividend and
the final dividend paid* and dividing the result by the market value of the
Equity Security as of the close of business three days prior to the Initial
Date of Deposit. An investment in each
Trust involves the purchase of a quality
portfolio of attractive equities with high dividend yields in one convenient
purchase.
Each Trust consists (a) of the Equity Securities listed under the applicable
"Portfolio" as may continue to be held
from time to time in such Trust, (b) any
additional Equity Securities acquired and held by such Trust pursuant to the
provisions of the Trust Agreement and (c) any cash held in the related Income
and Capital Accounts. Neither the Sponsor nor the Trustee shall be liable in
any way for any failure in any of the Equity Securities. However, should any
contract for the purchase of any of the Equity Securities initially deposited
hereunder fail, the Sponsor will, unless substantially all of the moneys held
in such Trust to cover such purchase are reinvested in substitute Equity
Securities in accordance with the Trust Agreement, refund the cash
- --------
*Generally, United Kingdom and Hong Kong companies pay one interim and one
final dividend per fiscal year.
7
<PAGE>
and sales charge attributable to such failed contract to all Unitholders on or
before the next scheduled distribution date.
Investors should note that the above criteria were applied to the Equity
Securities selected for inclusion in each Trust portfolio as of the date
indicated above. Since the Sponsor may deposit additional Equity Securities
which were originally selected through this process, the Sponsor may continue
to sell Units of a Trust even though
yields on these Equity Securities may have
changed subsequent to the Initial Date of Deposit or the Equity Securities may
no longer be included in the respective index, and therefore the Equity
Securities would no longer be chosen for deposit into a Trust if the selection
process were to be made again at a later time.
UNITED STATES TRUST
The Dow Jones Industrial Average. The Dow Jones Industrial Average ("DJIA")
was first published in The Wall Street
Journal in 1896. Initially consisting of
just 12 stocks, the DJIA expanded to 20 stocks in 1916 and its present size of
30 stocks on October 1, 1928. The companies which make up the DJIA have
remained relatively constant over the life of the DJIA. Taking into account
name changes, 9 of the original DJIA
companies are still in the DJIA today. For
two periods of 17 consecutive years,
March 14, 1939-July 1956 and June 1, 1959-
August 6, 1976, there were no changes to
the list. The following is the list as
it currently appears:
<TABLE>
<CAPTION>
<S> <C>
AlliedSignal Goodyear Tire & Rubber Company
Aluminum Company of America International Business Machines Corp.
American Express Company International Paper Company
American Telephone & Telegraph Company McDonald's Corp.
Bethlehem Steel Corp. Merck & Co., Inc.
Boeing Company Minnesota Mining & Manufacturing
Caterpillar Inc. Company
Chevron Corp. J.P. Morgan & Co., Inc.
Coca-Cola Company Philip Morris Companies Inc.
Walt Disney Company Procter & Gamble Company
E.I. du Pont de Nemours & Company Sears, Roebuck & Company
Eastman Kodak Company Texaco Inc.
Exxon Corp. Union Carbide Corp.
General Electric Company United Technologies Corp.
General Motors Westinghouse Electric Corp.
Woolworth Corp.
</TABLE>
United States Trust Portfolio
The United States Trust consists of common stocks of those companies which
are in the Dow Jones Industrial Average, which had the highest dividend yield
as of the close of business three days prior to the Initial Date of Deposit.
The United States Trust consists of common stocks of the following ten
companies: [the following are several of the companies that are likely to be
included in the portfolio, however, the actual portfolio may change as of the
Initial Date of Deposit]
American Express Company. American Express Company provides travel-related,
diversified financial, international
banking and investment services worldwide.
The company's products and services include credit cards, traveler's cheques,
investment and merchant banking, private and institutional banking, foreign
exchange and various other financial products including annuities and mutual
funds.
8
<PAGE>
Chevron Corporation. Chevron
Corporation is an international oil company with
activities in the US and abroad. The company is involved in worldwide,
integrated petroleum operations which consist of exploring for, developing and
producing petroleum liquids and natural gas as well as transporting the
products. The company is also active in the mineral and chemical industry.
Du Pont (E.I.) De Nemours & Company.
Du Pont (E.I.) De Nemours & Company is a
diversified international company primarily involved in petroleum, coal and
other energy sources. The company is also a large chemical manufacturer with
interests in chemicals, fibers, transportation, construction, electronics,
health care and agriculture. DuPont Nylon, a company division, makes nylon
textiles, flooring, resins and specialties.
Eastman Kodak Company. Eastman Kodak Company's activities are divided into
the imaging, information, chemicals and health segments. The various segments
provide a number of products and services including cameras, photofinishing,
film, audiovisual equipment, chemicals, plastics and pharmaceutical and
consumer healthcare products. The company's products and services are offered
worldwide.
Exxon Corporation. Exxon Corporation explores for and produces crude oil and
natural gas, and manufactures petroleum products. The company explores for and
mines coal and minerals, and transports/sells crude oil, natural gas and
petroleum products. Operations are both
domestic and international, including a
representative office in Moscow.
Merck & Company, Inc. Merck & Company, Inc. manufactures and produces a wide
range of human and animal pharmaceuticals and specialty chemicals. Products
include anti-hypertensives, cardiovasculars, anti-inflammatories, vaccines and
glaucoma treatments. Animal products include preventions for canine heartworm
disease and poultry disease. Specialty
chemicals are for use in water treatment
and making food additives.
Minnesota Mining & Manufacturing Company. Minnesota Mining & Manufacturing
Company operates in the industrial and electronic, information imaging
technologies, life sciences and commercial and consumer business segments. The
company manufactures industrial,
commercial, health care and consumer products,
including adhesives, abrasives, laser imagers and "Scotch Brand" products,
which are marketed worldwide.
Philip Morris Companies, Inc. Philip Morris Companies, Inc. operates a large
international consumer goods company through its tobacco, food and beer
segments. The company's major
subsidiaries include Philip Morris U.S.A., Philip
Morris International, Inc., Kraft General Foods Group and the Miller Brewing
Company. Philip Morris is also involved in real estate and financial services.
Sears, Roebuck and Company. Sears,
Roebuck and Company operates in the retail
and financial services industries. The company's subsidiaries include Sears
which conducts merchandising and credit operations; Allstate Insurance Group
providing property-liability and brokerage; and Coldwell Banker Real Estate
Group.
Texaco, Inc. Texaco, Inc. and its subsidiaries, explore for, produce,
transport, refine and market crude oil, natural gas and petroleum products,
including petrochemicals, worldwide. The company owns, leases or has interests
in extensive production, manufacturing, marketing, transportation and other
facilities throughout the world.
Union Carbide Corporation. Union Carbide Corporation manufactures chemicals
and plastics. The company's products include fabricated plastic products,
specialty polymers, industrial chemicals, solvents and coatings and specialty
chemicals such as biocides, silicone and plastic additives. Union Carbide's
products are sold worldwide.
9
<PAGE>
United Technologies Corporation.
United Technologies Corporation manufactures
and sells products and services to the aerospace, building and automobile
industries. The company produces jet engines, helicopters, air conditioning
equipment, elevators and escalators and automobile products. United
Technologies sells its products internationally.
Westinghouse Electric Corporation.
Westinghouse Electric Corporation has five
core businesses which include electronic systems, environmental systems, power
systems, Thermo King Corporation and Westinghouse Broadcasting. The company
produces high-technology products, owns and operates radio and TV stations and
supplies transport temperature controls for vehicles and ships. Westinghouse
sells their products worldwide.
Woolworth Corporation. Woolworth Corporation is a multinational retailer of
general merchandise, men's, women's and
children's apparel, sporting goods, and
footwear and accessories through approximately 8,990 stores in the United
States and around the world. The company
operates stores under the "Woolworth",
"Woolco", "Kinney", "Foot Locker" and "Lady Foot Locker" names, to name a few.
The following table sets forth a comparison of the dividends, appreciation
and total return of the ten highest yielding DJIA common stocks (the "10
Highest Yielding DJIA Stocks") with those of all common stocks comprising the
DJIA.
<TABLE>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
<CAPTION>
10 HIGHEST YIELDING DJIA STOCKS (1) DOW JONES INDUSTRIAL AVERAGE
------------------------------------- -------------------------------------
ACTUAL ACTUAL
DIVIDEND TOTAL DIVIDEND TOTAL
YEAR APPRECIATION (2) YIELD (3) RETURN (4) APPRECIATION (2) YIELD (3) RETURN (4)
- ---- ---------------- --------- ---------- ---------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
1974 (16.32) 7.37 (8.95) (27.57) 4.43 (23.14)
1975 48.78 7.95 56.73 38.32 6.08 44.40
1976 27.70 7.10 34.80 17.86 4.86 22.72
1977 (6.75) 5.92 (0.83) (17.27) 4.56 (12.71)
1978 (6.92) 7.11 0.19 (3.15) 5.84 2.69
1979 3.97 8.41 12.38 4.19 6.33 10.52
1980 17.83 8.54 26.37 14.93 6.48 21.41
1981 (0.94) 8.29 7.35 (9.23) 5.83 (3.40)
1982 17.24 8.22 25.46 19.60 6.19 25.79
1983 30.20 8.25 38.45 20.30 5.38 25.68
1984 0.24 6.65 6.89 (3.76) 4.82 1.06
1985 21.45 6.97 28.42 27.66 5.12 32.78
1986 23.74 6.13 29.87 22.58 4.33 26.91
1987 1.87 5.10 6.97 2.26 3.76 6.02
1988 15.80 5.80 21.60 11.85 4.10 15.95
1989 20.28 6.94 27.22 26.96 4.75 31.71
1990 (13.00) 5.06 (7.94) (4.34) 3.77 (0.57)
1991 28.32 5.22 33.54 20.32 3.61 23.93
1992 3.44 4.82 8.26 4.17 3.17 7.34
1993 23.06 4.20 27.26 13.72 2.99 16.72
10
<PAGE>
<FN>
<F1>The 10 Highest Yielding DJIA Stocks for any given period were selected by
ranking the dividend yields for each of the stocks in the DJIA as of the
beginning of the period, based upon an annualization of the last quarterly
or semi-annual regular dividend distribution (which would have been
declared in the preceding year) divided by that stock's market value on the
first trading day on the New York Stock Exchange in the given period.
<F2>Appreciation for the 10 Highest Yielding DJIA Stocks ("Stocks") is
calculated by subtracting the market value of the Stocks as of the first
trading day on the New York Stock Exchange in a given period from the
market value of the Stocks as of the last trading day in that period, and
dividing the result by the market value of the Stocks as of the first
trading day in that period. Appreciation for the DJIA is calculated by
subtracting the opening value of the DJIA as of the first trading day in a
given period from the closing value of the DJIA as of the last trading day
in that period, and dividing the result by the opening value of the DJIA as
of the first trading day in that period.
<F3>Actual dividend yield for the Stocks is calculated by adding the total
dividends received on the Stocks in a given period and dividing the result
by the market value of the Stocks as of the first trading day in that
period. Actual dividend yield for the DJIA is calculated by taking the
total dividends credited to the DJIA and dividing the result by the opening
value of the DJIA as of the first trading day of that period.
<F4>Total return represents the sum of appreciation and actual dividend yield.
Total return does not take into consideration any sales charges,
commissions, expenses or taxes. Total return does not take into
consideration any reinvestment of dividend income. Based on the year-by-
year returns contained in the table, over the last 20 years, the 10 Highest
Yielding DJIA Stocks achieved an average annual total return of 17.53%, as
compared to the average annual total return of all of the stocks in the
DJIA of 12.56%. These stocks also had a higher average dividend yield in
each of the last 20 years and outperformed the DJIA in 15 of these years.
Although the United States Trust seeks to achieve a better performance than
the DJIA, there can be no assurance that the United States Trust will
outperform the DJIA over its one-year life or over consecutive rollover
periods, if available.
</TABLE>
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the United States Trust. Both stock prices (which
may appreciate or depreciate) and
dividends (which may be increased, reduced or
eliminated) will affect the returns. As indicated in the above table, the 10
Highest Yielding DJIA Stocks underperformed the DJIA in 5 years and there can
be no assurance that the United States Trust will outperform the DJIA over the
life of such Trust or over consecutive rollover periods, if available. A
Unitholder in the United States Trust would not necessarily realize as high a
total return on an investment in the Stocks upon which the returns shown above
are based. The total return figures shown above do not reflect sales charges,
commissions, Trust expenses or taxes, and such Trust may not be able to invest
equally in the 10 Highest Yielding DJIA
Stocks and may not be fully invested at
all times. Had the United States Trust been available during this 20 year
period, after deductions for expenses and sales charges, such Trust would have
underperformed the DJIA in 11 of those years.
11
<PAGE>
The chart below represents past performance of the DJIA and the 10 Highest
Yielding DJIA Stocks (but not the United States Trust) and should not be
considered indicative of future results.
Further, results are hypothetical. The
chart assumes that all dividends during a year are reinvested at the end of
that year and does not reflect sales charges, commissions, expenses or income
taxes. There can be no assurance that the United States Trust will outperform
the DJIA over its one-year life or over consecutive rollover periods, if
available.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTED
JANUARY 1, 1975
-------------------------------------------------------
10 HIGHEST
YIELDING
PERIOD DJIA STOCKS DJIA
------ ----------- -----------
<S> <C> <C>
1975 $ 15,912.00 $ 14,374.00
1976 21,170.92 17,409.79
1977 20,266.92 15,362.40
1978 20,200.04 15,804.83
1979 22,731.10 17,427.99
1980 29,318.57 21,012.93
1981 31,048.37 20,422.47
1982 40,496.39 25,483.15
1983 56,245.44 31,787.68
1984 62,151.21 32,188.21
1985 77,981.12 42,382.22
1986 97,180.07 53,452.45
1987 107,199.34 56,622.18
1988 129,207.36 65,409.94
1989 172,026.68 85,490.80
1990 159,348.31 85,148.83
1991 210,993.10 105,005.54
1992 221,331.76 112,586.94
1993 281,843.87 131,017.42
</TABLE>
UNITED KINGDOM TRUST
The Financial Times Industrial Ordinary Share Index. The FT Index is comprised
of 30 common stocks chosen by the editors of The Financial Times as
representative of British industry and commerce. The FT Index began as the
Financial News Industrial Ordinary Share
Index in London in 1935 and became the
Financial Times Industrial Ordinary Share Index in 1947. The following stocks
are currently represented in the FT Index:
<TABLE>
<CAPTION>
<S> <C> <C>
Allied Lyons PLC British Airways Imperial Chemical
ASDA Group Cadbury Schweppes Industries PLC
BICC PLC Courtaulds Lucas Industries PLC
BOC Group Forte Marks & Spencer
BTR General Electric National Westminster
Blue Circle Industries PLC Glaxo Holdings Bank PLC
Boots Co. Grand Metropolitan Peninsular & Orient Steam Navigation Company
British Petroleum Guest Keen & Nettlefolds (GKN) PLC Reuters Holdings
British Telecom Guinness Royal Insurance Holdings
British Gas PLC Hanson PLC SmithKline Beecham
Tate & Lyle
Thorn EMI
</TABLE>
12
<PAGE>
United Kingdom Trust Portfolio
The United Kingdom Trust consists of common stocks of those ten companies
which are in the Financial Times
Industrial Ordinary Share Index, which had the
highest dividend yield as of three days prior to the Initial Date of Deposit.
The United Kingdom Trust consists of common stocks of the following ten
companies: [the following are several of
the companies likely to be included in
the portfolio, however, the actual portfolio may change as of the Initial Date
of Deposit.]
Allied Lyons Plc. Allied Lyons Plc produces, processes and retails beverages
and food. The company operates breweries, distilleries and wineries, processes
food under the brands "Bustelo Coffee", "Maryland Cookies", "Lyons" cakes,
coffee and tea and owns the food retail businesses "Baskin-Robbins", "Dunkin'
Donuts", "Victoria Wine", and others.
Asda Group Plc. Asda Group Plc retails food, apparel, home furnishings and
other products. The company's superstores sell fresh and frozen foods, meats,
bakery goods produced on premises, clothing, gardening supplies, toys,
stationary, greeting cards and gifts. Asda, through its "allied" stores, sells
furniture and carpeting.
BICC Plc. BICC Plc's principal activities are international engineering
business which serves the international market for infrastructure development,
comprising power, communications, transportation and cables and construction.
The principal subsidiaries include Balfour Beatty Ltd, BICC Cables,
Australasia, North American Cables and BICC Developments.
Blue Circle Industries Plc. Blue
Circle Industries Plc manufactures and sells
cement, concrete and heating and home products. Products include bathroom
fittings, lawnmowers, gas cookers,
heating boilers, cement and building bricks.
BOC Group Plc. BOC Group Plc manufactures industrial gases, pharmaceuticals,
medical equipment and vacuum pumps. The company produces and supplies oxygen,
nitrogen and specialty gases to industrial users throughout the world. BOC
manufactures anesthetic agents, cardiac drugs and patient monitoring devices.
The company also produces equipment used to coat glass and packaging film.
British Gas Plc. British Gas Plc's principal activity is the purchase,
transmission, distribution and supply of gas in Great Britian, supported by a
broad range of services to customers and the marketing of gas appliances. The
company is also active in the overseas
gas supply market, principally through a
subsidiary of Canada, and has significant operations exploring for and
producing oil and gas in the UK and overseas.
British Telecom Plc. British Telecom Plc supplies telecommunication services
and equipment both within the UK and around the world. Some of the company's
principal subsidiaries include BT France, BT Telecom GmbH in Germany, and BT
Repair Services Ltd.
GKN Plc. GKN Plc is an international group of companies involved in
designing, developing and manufacturing automotive components and other
engineered products and provides a range of industrial and distribution
services.
Glaxo Holdings Plc. Glaxo Holdings Plc is a holding company for
pharmaceutical manufacturers. The company derives more than 50% of its sales
from "Zantac", an antiulcer drug. In the
United States, Glaxo, Inc. researches,
develops and manufactures prescription medicines that treat gastrointestinal,
respiratory, infectious and cardiovascular diseases. The company markets its
products worldwide.
Hanson Plc. Hanson Plc's principal activities are in industrial, consumer,
and building products, including coal mining, tobacco, and lumber. The
principal subsidiaries are Hanson Amalgamated Industries Ltd, Imperial Tobacco
Ltd, and London Brick Company Ltd.
13
<PAGE>
Imperial Chemical Industries. Imperial Chemical Industries operates through
two divisions: Specialty Chemicals and Materials which specializes in paints,
materials and explosives; and Industrial Chemicals which concentrates on
chemicals and polymers.
Lucas Industries Plc. Lucas Industries Plc provides advanced technology
systems, components and services to the aerospace and automotive industries.
National Westminster Bank. National Westminster Bank provides an extensive
range of banking and financial services, both domestic and international.
Peninsular & Orient Steam Navigation Company. The company's principal
activities include passenger shipping, transport services, house building,
construction and development, container and bulk shipping and property
investment. Principal subsidiaries include Earls Court & Olympia Ltd, P & O
Cruises Ltd, P & O Bulk Shipping Ltd, and P & O Properties Ltd.
SmithKline Beecham Plc. SmithKline
Beecham Plc's principal activities are the
discovery, development, manufacture and marketing of a wide range of human and
animal pharmaceutical products, over the counter medicines and health-related
consumer brands and laboratory testing services.
The FT Index statistics are based on a geometric, unweighted average of 30
companies, while the statistics for the ten highest yielding stocks are based
on an approximately equal distribution (based on market price) of each of the
ten stocks. All figures in the following table have been adjusted by taking
into account currency exchange rates for U.S. dollars as of the end of each
period of time shown (a "Period"). The following table sets forth a comparison
of the dividends, appreciation and total return of the ten highest yielding FT
Index common stocks (the "10 Highest Yielding FT Index Stocks") with those of
all common stocks comprising the FT Index.
<TABLE>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
<CAPTION>
10 HIGHEST YIELDING FT INDEX STOCKS(1) FINANCIAL TIMES ORDINARY SHARE INDEX (FT INDEX)*
-------------------------------------- ------------------------------------------------
PERIOD APPRECIATION(2) ACTUAL DIVIDEND YIELD(3) TOTAL RETURN(4) APPRECIATION(2) ACTUAL DIVIDEND YIELD(3) TOTAL RETURN(4)
- ------ --------------- ------------------------ --------------- --------------- ------------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
1974 (49.10)% 8.66% (40.44)% (52.54)% 5.89% (46.65)%
1975 127.22 15.77 142.99 100.41 11.18 111.59
1976 (23.33) 7.44 (15.89) (20.59) 5.01 (15.58)
1977 73.41 13.86 87.27 53.46 8.46 61.92
1978 7.22 10.51 17.73 3.57 6.35 9.92
1979 (5.75) 10.51 4.76 (3.94) 7.53 3.59
1980 16.49 13.66 30.15 22.57 9.20 31.77
1981 (14.02) 7.76 (6.26) (10.36) 5.06 (5.30)
1982 34.04 9.99 44.03 (4.41) 4.83 0.42
1983 34.17 7.89 42.06 16.60 5.34 21.94
1984 (0.85) 6.35 5.50 (2.26) 4.41 2.15
1985 69.36 9.28 78.64 48.25 6.49 54.74
1986 26.35 6.53 32.88 19.14 5.22 24.36
1987 40.49 7.61 48.10 32.97 6.02 38.99
1988 5.19 6.19 11.38 1.62 5.12 6.74
1989 22.08 6.63 28.71 17.57 5.23 22.80
1990 1.91 7.35 9.26 4.31 5.98 10.29
1991 8.70 7.87 16.57 9.36 5.29 14.65
1992 (1.41) 5.68 4.27 (6.33) 4.00 (2.33)
1993 31.55 6.14 37.69 14.24 4.16 18.40
*The Sponsor has not independently verified this data but has no reason to
believe that this data is incorrect in any material respect.
14
<PAGE>
<FN>
<F1>The 10 Highest Yielding FT Index Stocks for each period were identified by
ranking the dividend yields for each of the stocks in the FT Index as of
the beginning of that period, generally computed by adding together the
interim and final dividends (United Kingdom companies generally pay one
interim and one final dividend per fiscal year) declared in that period and
dividing the result by that stock's market value on the first trading day
on the London Stock Exchange in the period.
<F2>Appreciation for the 10 Highest Yielding FT Index Stocks ("the FT Stocks")
is calculated by subtracting the market value of the FT Stocks as of the
first trading day on the London Stock Exchange in the period from the
market value of the FT Stocks as of the last trading day in that period,
and dividing the result by the market value of the FT Stocks as of the
first trading day in that period. Appreciation for the FT Index is
calculated by subtracting the opening value of the FT Index as of the first
trading day in the period from the closing value of the FT Index as of the
last trading day in that period, and dividing the result by the opening
value of the FT Index as of the first trading day in that period.
<F3>Actual dividend yield for the FT Stocks is calculated by adding together
the total dividends received on the FT Stocks in the period and dividing
the result by the market value of the FT Stocks as of the first trading day
in that period. Actual dividend yield for the FT Index is calculated by
dividing the total adjustments credited to the FT Index by the opening
value of the FT Index as of the first trading day of the period. No
adjustments have been made to reflect taxes payable or withholding taxes.
<F4>Total return represents the sum of appreciation and actual dividend yield.
Total return does not take into consideration any sales charges,
commissions, expenses or taxes that will be incurred by the United Kingdom
Trust. Total return does not take into consideration any reinvestment of
dividend income. From January 1974 through December 1993, the 10 Highest
Yielding FT Index Stocks achieved an annual total return of 23.51%, as
compared to the average annual total return of all of the stocks in the FT
Index of 14.13%. These stocks also had a higher average dividend yield in
each of the last 20 years and outperformed the FT Index in 16 of these
years. Although the United Kingdom Trust seeks to achieve a better
performance than the FT Index, there can be no assurance that the United
Kingdom Trust, net of sales charges and expenses, will outperform the FT
Index over its one-year life or that successive series of the United
Kingdom Trust would outperform the FT Index over consecutive rollover
periods, if available.
</TABLE>
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the United Kingdom Trust. Both stock prices (which
may appreciate or depreciate) and
dividends (which may be increased, reduced or
eliminated) will affect the returns. As indicated in the above tables, the 10
Highest Yielding FT Index Stocks underperformed the FT Index in 4 years and
there can be no assurance that the United Kingdom Trust will outperform the FT
Index over the life of the United Kingdom Trust or over successive rollover
periods, if available. A Unitholder in the United Kingdom Trust would not
necessarily realize as high a total return on an investment in the FT Stocks
upon which the returns shown above are based. The total return figures shown
above do not reflect sales charges, commissions, expenses or taxes which will
be incurred by the United Kingdom Trust, and such Trust may not be able to
invest equally in the 10 Highest Yielding FT Stocks and may not be fully
invested at all times. Had the United Kingdom Trust been available during this
20 year period, after deductions for sales charges and expenses, such Trust
would have underperformed the FT Index in of those years.
15
<PAGE>
The chart below represents past performance of the FT Index and the 10
Highest Yielding FT Index Stocks (but not the United Kingdom Trust) and should
not be considered indicative of future results. Further, results are
hypothetical. The chart assumes that all
dividends during a year are reinvested
at the end of that year and does not reflect commissions, custodial fees or
income taxes. All figures in the following table have been adjusted by taking
into account currency exchange rates for U.S. dollars as of the end of each
period of time shown (a "Period"). There can be no assurance that the United
Kingdom Trust will outperform the FT Index over its one-year life or over
consecutive rollover periods, if available.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTED
JANUARY 1, 1974
--------------------------------------------------
10 HIGHEST
YIELDING FT
INDEX
PERIOD STOCKS FT INDEX
------ ----------- -----------
<S> <C> <C> <C>
1974 $ 4,630.19 $ 3,792.12
1975 11,250.91 8,023.74
1976 9,463.14 6,773.64
1977 17,721.62 10,967.88
1978 20,863.67 12,055.90
1979 21,856.78 12,488.70
1980 28,446.59 16,456.37
1981 26,665.84 15,584.18
1982 38,406.81 15,649.63
1983 54,560.71 19,083.16
1984 57,561.55 19,493.45
1985 102,827.95 30,164.16
1986 136,637.78 37,512.15
1987 202,360.55 52,138.14
1988 225,389.18 55,652.25
1989 290,098.41 68,340.97
1990 316,961.52 75,373.25
1991 369,482.05 86,415.43
1992 385,258.93 84,401.95
1993 682,355.31 140,590.76
</TABLE>
HONG KONG TRUST
The Hang Seng Index. The Hang Seng Index, first published in 1969, consists of
33 of the 358 stocks currently listed on the Stock Exchange of Hong Kong Ltd.
(the "Hong Kong Exchange"). The Hang Seng Index, which is representative of
commerce and industry, finance, properties and utilities, is comprised of the
following companies:
<TABLE>
<CAPTION>
<S> <C> <C>
Bank of East Asia Hong Kong Electric Lai Sun Garment
Cathay Pacific Hong Kong and China Gas International
Cheung Kong Hong Kong and Shanghai Hotels Mandarin Oriental Miramar
China Light & Power Hong Kong Land Holdings Limited New World Dev.
Citic Pacific Hong Kong Telecommunications Shun Tak Holdings Limited
Dairy Farm Int. Hopewell Holdings Sun Hung Kai Properties
Great Eagle Holdings HSBC Holdings PLC Swire Pacific (A)
Hang Lung Development Company Hutchison Whampoa TV Broadcasts
Hang Seng Bank Hysan Development Company Wharf Holdings
Henderson Land Jardine Matheson Winsor Industrial
Hong Kong Aircraft Jardine Strategic Wheelock & Co.
</TABLE>
16
<PAGE>
Hong Kong Trust Portfolio
The Hong Kong Trust consists of common stocks of companies which are in the
Hang Seng Index, having the highest dividend yield as of three days prior to
the Initial Date of Deposit. The Hong Kong Trust consists of common stocks of
the following ten companies: [the
following are several of the companies likely
to be included in the portfolio,
however, the actual portfolio may change as of
the Initial Date of Deposit]
Cathay Pacific Airways. Cathay Pacific Airways is a major airline operator
with services covering the Far East, the Middle East, Europe, North America,
and South Africa. The company is also involved in aircraft overhaul and
maintenance, airport ground support and engineering and aircraft leasing.
China Light & Power Company. China
Light & Power Company supplies electricity
to Kowloon and the new territories in Hong Kong.
Hang Lung Development Company. Hang Lung Development Company is a property
and investment holding company with
stakes in Amoy Properties and Grand Hotels.
The company invests in commercial, office, residential and industrial
properties in Hong Kong.
Hang Seng Bank. Hang Seng Bank offers general banking services through 124
branches in Hong Kong. The bank also has
two branches in New York and a limited
service branch in San Francisco.
Henderson Land Development Company Ltd. Henderson Land Development Company
Ltd. is a holding company whose main operations include property development
and investment, project management, construction, property management and
investment holding.
Hong Kong Electric Holdings Ltd. Hong Kong Electric Holdings Ltd. provides
electricity to commercial, industrial and domestic customers in Hong Kong.
Hong Kong Telecom. Hong Kong Telecom provides telecommunication, computer,
engineering and other services. The company also sells and rents
telecommunication equipment.
Hopewell Holdings. Hopewell Holdings has operations in construction,
engineering and property investment. Projects include a superhighway, hotels
and commercial and office building sites.
HSBC Holdings Plc. HSBC Holdings Plc provides international and domestic
services through over 1,300 branches in 48 countries. Services include
consumer, trade, insurance and corporate finance.
Hysan Development Company Ltd. Hysan Development Company Ltd. is involved in
property investment and development. The company has a strong presence in the
Causeway Bay area on Hong Kong Island.
Lai Sun Garment (International) Ltd. Lai Sun Garment (International) Ltd.
manufactures and sells garments. The company has diversified into property
development and investment holding and has hotel and restaurant operations.
Shun Tak Holdings Ltd. Shun Tak Holdings Ltd. is involved in shipping,
property, restaurants, air transportation and hotels in the Asia-Pacific
region. The company operates jet-foil services, develops residential and
commercial properties in Hong Kong,
Macau and Australia, has interests in three
restaurants and five hotels and operates air cargo services to nine
destinations in Europe and Asia.
Sun Hang Kai Properties Ltd. Sun Hang Kai Properties Ltd. develops and
invests in properties for sale or rental purposes. The company concentrates on
lower to medium sized residential buildings in the new territories in Hong
Kong.
Winsor Industrial Corporation Ltd. Winsor Industrial Corporation Ltd. is an
investment holding company whose subsidiaries are involved in textile trading
and investment, the manufacture of
knitwear and garments and textile finishing.
The company is also involved in property management.
17
<PAGE>
The following table sets forth a comparison of the dividends, appreciation
and total return of the ten highest
yielding Hang Seng Index common stocks (the
"10 Highest Yielding Hang Seng Stocks") with those of all common stocks
comprising the Hang Seng Index. All figures have been adjusted by taking into
account currency exchange rates for U.S. dollars as of the end of each period
of time shown (a "Period").
<TABLE>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
<CAPTION>
10 HIGHEST YIELDING HANG SENG
STOCKS(1) HANG SENG INDEX (HANG SENG)*
----------------------------- ----------------------------
ACTUAL ACTUAL
DIVIDEND TOTAL DIVIDEND TOTAL
PERIOD APPRECIATION(2) YIELD(3) RETURN(4) APPRECIATION(2) YIELD(3) RETURN(4)
- ------ --------------- -------- --------- --------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1978 19.82% 8.22% 28.04% 17.83% 5.68% 23.51%
1979 72.63 9.65 82.28 72.27 6.06 78.33
1980 34.03 7.37 41.40 61.60 4.23 65.83
1981 (10.94) 7.08 (3.86) (13.75) 2.68 (11.07)
1982 (46.13) 7.16 (38.97) (51.24) 3.45 (47.79)
1983 (15.40) 7.92 (7.48) (6.92) 6.03 (0.89)
1984 53.82 11.50 65.32 36.45 6.09 42.54
1985 40.25 7.27 47.52 46.33 4.77 51.10
1986 54.50 5.99 60.49 46.90 4.26 51.16
1987 (2.15) 5.18 3.03 (10.06) 3.33 (6.73)
1988 28.02 6.02 34.04 16.07 4.53 20.60
1989 2.66 6.75 9.41 5.55 4.64 10.19
1990 (1.93) 8.04 6.11 6.71 5.28 11.99
1991 40.07 8.44 48.51 42.41 5.84 48.25
1992 32.08 6.86 38.94 28.87 4.76 33.63
1993 100.80 6.19 106.99 116.14 4.97 121.11
*The Sponsor has not independently verified this data but has no reason to
believe that this data is incorrect in any material respect.
<FN>
<F1>The 10 Highest Yielding Hang Seng Stocks for each period were identified by
ranking the dividend yields for each of the stocks in the Hang Seng Index
as of the beginning of that period, computed by adding together the interim
and final dividends (Hong Kong companies generally pay one interim and one
final dividend per fiscal year) declared in that period and dividing the
result by that stock's market value on the first trading day on the Hong
Kong Stock Exchange in the given period.
<F2>Appreciation for the 10 Highest Yielding Hang Seng Stocks ("the HK Stocks")
is calculated by subtracting the market value of the HK Stocks as of the
first trading day on the Hong Kong Stock Exchange in the period from the
market value of the HK Stocks as of the last trading day in that period,
and dividing the result by the market value of the HK Stocks as of the
first trading day in that period. Appreciation for the Hang Seng Index is
calculated by subtracting the opening value of the Hang Seng Index as of
the first trading day in the period from the closing value of the Hang Seng
Index as of the last trading day in that period, and dividing the result by
the opening value of the Hang Seng Index as of the first trading day in
that period.
<F3>Actual dividend yield for the HK Stocks is calculated by adding together
the total dividends received on the HK Stocks in the period and dividing
the result by the market value of the HK Stocks as of the first trading day
in that period. Actual dividend yield for the Hang Seng Index is calculated
by dividing the total dividends credited to the Hang Seng Index by the
opening value of the Hang Seng Index as of the first trading day of the
period.
18
<PAGE>
<F4>Total return represents the sum of appreciation and actual dividend yield.
Total return does not take into consideration any sales charges,
commissions, expenses or taxes that will be incurred by the Hong Kong
Trust. Total return does not take into consideration any reinvestment of
dividend income. From January 1978 through December 1993 the 10 Highest
Yielding Hang Seng Stocks achieved an average annual total return of
27.38%, as compared to the average annual total return of all of the stocks
in the Hang Seng Index of 24.49%. These stocks also had a higher average
dividend yield in each of the last 16 years and outperformed the Hang Seng
Index in 10 of these years. Although the Hong Kong Trust seeks to achieve a
better performance than the Hang Seng Index, there can be no assurance that
the Hong Kong Trust, net of sales charges and expenses, will outperform the
Hang Seng Index over its one-year life or that successive series of the
Hong Kong Trust would outperform the Hang Seng Index over consecutive
rollover periods, if available.
</TABLE>
The returns shown above represent past performance and are not guarantees of
future performance and should not be used as a predictor of returns to be
expected in connection with the Hong Kong Trust. Both stock prices (which may
appreciate or depreciate) and dividends (which may be increased, reduced or
eliminated) will affect the returns. As indicated in the above tables, the 10
Highest Yielding Hang Seng Index Stocks
underperformed the Hang Seng Index in 6
years and there can be no assurance that the Hong Kong Trust will outperform
the Hang Seng Index over the life of the Hong Kong Trust or over successive
rollover periods, if available. A Unitholder in the Hong Kong Trust would not
necessarily realize as high a total return on an investment in the HK Stocks
upon which the returns shown above are based. The total return figures shown
above do not reflect sales charges, commissions, expenses or taxes which will
be incurred by the Hong Kong Trust, and the Hong Kong Trust may not be able to
invest equally in the 10 Highest
Yielding Hang Seng Stocks and may not be fully
invested at all times. Had the Hong Kong Trust been available during this 20
year period, after deductions for expenses and sales charges, such Trust would
have underperformed the Hang Seng Index in of those years.
The chart below represents past
performance of the Hang Seng Index and the 10
Highest Yielding Hang Seng Index Stocks (but not the Hong Kong Trust) and
should not be considered indicative of future results. Further, results are
hypothetical. The chart assumes that all
dividends during a year are reinvested
at the end of that year and does not reflect commissions, custodial fees or
income taxes. All figures have been adjusted by taking into account currency
exchange rates for U.S. dollars as of the end of each period of time shown (a
"Period"). There can be no assurance that the Hong Kong Trust will outperform
the Hang Seng Index over its one-year life or over consecutive rollover
periods, if available.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTED
JANUARY 1, 1978
-------------------------------------------------------
10 HIGHEST YIELDING
PERIOD HANG SENG STOCKS HANG SENG INDEX
------ ------------------- ---------------
<S> <C> <C>
1978 $ 12,804.00 $ 12,351.00
1979 23,339.13 22,025.54
1980 33,001.53 36,524.95
1981 31,727.67 32,481.64
1982 19,363.40 16,958.66
1983 17,915.02 16,807.73
1984 29,617.10 23,957.74
1985 43,691.15 36,200.15
1986 70,119.93 54,720.14
1987 72,244.57 51,037.47
1988 96,836.62 61,551.19
1989 105,948.94 67,823.26
1990 112,422.42 75,955.27
1991 166,958.54 112,603.69
1992 231,972.19 150,472.31
1993 480,159.24 332,709.32
</TABLE>
19
<PAGE>
COMBINED STRATEGY
The following table compares the total returns (change in share prices plus
dividends reinvested at the end of each year) for various periods and
cumulative performance of hypothetical
investments of equal amounts of money in
the ten highest dividend yielding stocks in each of the Dow Jones Industrial
Average, the Financial Times Industrial Ordinary Share Index and the Hang Seng
Index with an investment of equal amounts in all three (the "Combined
Strategy"). These figures do not reflect commissions or taxes, nor the
performance of the Fund, which is subject to sales charges and expenses.
This represents past performance and should not be considered indicative of
future results. Both stock prices (which may appreciate or depreciate) and
dividends (which may be increased, reduced or eliminated) will affect the
returns. Also, in the case of the Foreign Trusts there are additional risks
associated with investments denominated in foreign currencies. However, it
indicates that diversifying an investment among the 10 highest yielding stocks
in each of these three indexes would have produced a higher total return than
the 10 highest yielding stocks in the DJIA while reducing the volatility in
total return of any of the three index
investments individually. All figures in
the table below other than the DJIA Ten columns have been adjusted by taking
into account currency exchange rates for U.S. dollars as of the end of each
period of time shown.
<TABLE>
<CAPTION>
DJIA TEN FT TEN HANG SENG TEN COMBINED STRATEGY
--------------------- ------------------ ------------------ -------------------------
TOTAL VALUE OF TOTAL VALUE OF TOTAL VALUE OF TOTAL VALUE OF
YEAR RETURN INVESTMENT RETURN INVESTMENT RETURN INVESTMENT RETURN INVESTMENT
---- ------ ---------- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 30,000
1978 0.19% 10,019 17.73% 11,773 28.04% 12,804 15.32% 11,532 34,596
1979 12.38 11,259 4.76 12,333 82.28 23,339 33.14 15,353 46,061
1980 26.37 14,228 30.15 16,052 41.40 33,002 32.64 20,365 61,095
1981 7.35 15,274 (6.26) 15,047 (3.86) 31,728 (0.92) 20,177 60,531
1982 25.46 19,163 44.03 21,672 (38.97) 19,363 10.17 22,229 66,689
1983 38.45 26,531 42.06 30,788 (7.48) 17,915 24.34 27,641 82,923
1984 6.89 28,359 5.50 32,481 65.32 29,617 25.90 34,801 104,403
1985 28.42 36,419 78.64 58,024 47.52 43,691 51.53 52,733 158,199
1986 29.87 47,297 32.88 77,102 60.49 70,120 41.08 74,396 223,188
1987 6.97 50,594 48.10 114,189 3.03 72,245 19.37 88,804 266,412
1988 21.60 61,522 11.38 127,183 34.04 96,837 22.34 108,642 325,928
1989 27.22 78,269 28.71 163,697 9.41 105,949 21.78 132,305 396,915
1990 (7.94) 72,054 9.26 178,856 6.11 112,422 2.48 135,582 406,746
1991 33.54 96,221 16.57 208,492 48.51 166,959 32.87 180,152 540,457
1992 8.26 104,169 4.27 217,395 38.94 231,972 17.16 211,060 633,181
1993 27.21 132,513 37.69 299,331 106.99 480,159 57.30 331,991 995,973
Total Return 1,225.13% 2,893.31% 4,701.59% 3,219.91%
Average Annual
Total Return 17.53% 23.67% 27.38% 24.47%
</TABLE>
RISK FACTORS
- -----------------------------------------------------------------------------
GENERAL. An investment in Units of a Trust should be made with an
understanding of the risks which an investment in common stocks entails,
including the risk that the financial condition of the issuers of the Equity
Securities or the general condition of the common stock market may worsen and
the value of the Equity Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock market
movements and to volatile increases and
decreases of value as market confidence
in
20
<PAGE>
and perceptions of the issuers change. These perceptions are based on
unpredictable factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
Shareholders of common stocks have rights to receive payments from the issuers
of those common stocks that are
generally subordinate to those of creditors of,
or holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by the Trusts have a right to
receive dividends only when and if, and in the amounts, declared by 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 in a portfolio may be
expected to fluctuate over the life of a Trust to values higher or lower than
those prevailing on the Initial Date of Deposit.
Holders of common stocks incur more
risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the entity, have
generally inferior rights to receive payments from the issuer in comparison
with the rights of creditors of, or holders of debt obligations or preferred
stocks issued by, the issuer. Cumulative
preferred stock dividends must be paid
before common stock dividends and any cumulative preferred stock dividend
omitted is added to future dividends payable to the holders of cumulative
preferred stock. Preferred stockholders are also generally entitled to rights
on liquidation which are senior to those of common stockholders.
Whether or not the Equity Securities are listed on a national securities
exchange, the principal trading market for the Equity Securities may be in the
over-the-counter market. As a result, the existence of a liquid trading market
for the Equity Securities may depend on whether dealers will make a market in
the Equity Securities. There can be no
assurance that a market will be made for
any of the Equity Securities, that any
market for the Equity Securities will be
maintained or of the liquidity of the
Equity Securities in any markets made. In
addition, the Trusts may be restricted
under the Investment Company Act of 1940
from selling Equity Securities to the Sponsor. The price at which the Equity
Securities may be sold to meet redemption, and the value of a Trust, will be
adversely affected if trading markets for the Equity Securities are limited or
absent.
Unitholders will be unable to dispose of any of the Equity Securities in a
Trust, as such, and will not be able to vote the Equity Securities. As the
holder of the Equity Securities, the
Trustee will have the right to vote all of
the voting stocks in each Trust and will vote such stocks in accordance with
the instructions of the Sponsor.
PETROLEUM COMPANIES. The Trusts may include securities which are issued by
companies engaged in refining and
marketing oil and related products. According
to the U.S. Department of Commerce, the factors which will most likely shape
the industry to 1996 and beyond include the price and availability of oil from
the Middle East, changes in United States environmental policies and the
continued decline in U.S. production of crude oil. Possible effects of these
factors may be increased U.S. and world
dependence on oil from the Organization
of Petroleum Exporting Countries ("OPEC") and highly uncertain and potentially
more volatile oil prices. Factors which the Sponsor believes may increase the
profitability of oil and petroleum
operations include increasing demand for oil
and petroleum products as a result of the continued increases in annual miles
driven and the improvement in refinery
operating margins caused by increases in
average domestic refinery utilization
rates. The existence of surplus crude oil
production capacity and the willingness to adjust
21
<PAGE>
production levels are the two principal requirements for stable crude oil
markets. Without excess capacity, supply disruptions in some countries cannot
be compensated for by others. Surplus capacity in Saudi Arabia and a few other
countries and the utilization of that capacity prevented during the Persian
Gulf crisis, and continue to prevent,
severe market disruption. Although unused
capacity contributed to market stability in 1990 and 1991, it ordinarily
creates pressure to overproduce and contributes to market uncertainty. The
likely restoration of a large portion of Kuwait and Iraq's production and
export capacity over the next few years
could lead to such a development in the
absence of substantial growth in world oil demand. Formerly, OPEC members
attempted to exercise control over production levels in each country through a
system of mandatory production quotas. Because of the crisis in the Middle
East, the mandatory system has since been replaced with a voluntary system.
Production under the new system has had to be curtailed on at least one
occasion as a result of weak prices, even in the absence of supplies from
Kuwait and Iraq. The pressure to deviate from mandatory quotas, if they are
reimposed, is likely to be substantial
and could lead to a weakening of prices.
In the longer term, additional capacity and production will be required to
accommodate the expected large increases in world oil demand and to compensate
for expected sharp drops in U.S. crude oil production and exports from the
Soviet Union. Only a few OPEC countries, particularly Saudi Arabia, have the
petroleum reserves that will allow the
required increase in production capacity
to be attained. Given the large-scale financing that is required, the prospect
that such expansion will occur enough to meet the increased demand is
uncertain.
Declining U.S. crude oil production will likely lead to increased dependence
on OPEC oil, putting refiners at risk of continued and unpredictable supply
disruptions. Increasing sensitivity to environmental concerns will also pose
serious challenges to the industry over the coming decade. Refiners are likely
to be required to make heavy capital investments and make major production
adjustments to the Clean Air Act. If the cost of these changes is substantial
enough to cut deeply into profits, smaller refiners may be forced out of the
industry entirely. Moreover, lower consumer demand due to increases in energy
efficiency and conservation, due to gasoline reformulations that call for less
crude oil, due to warmer winters or due to a general slowdown in economic
growth in this country and abroad, could
negatively affect the price of oil and
the profitability of oil companies. No assurance can be given that the demand
for or prices of oil will increase or that any increases will not be marked by
great volatility. Some oil companies may incur large cleanup and litigation
costs relating to oil spills and other
environmental damage. Oil production and
refining operations are subject to extensive federal, state and local
environmental laws and regulations governing air emissions and the disposal of
hazardous materials. Increasingly stringent environmental laws and regulations
are expected to require companies with oil production and refining operations
to devote significant financial and managerial resources to pollution control.
General problems of the oil and
petroleum products industry include the ability
of a few influential producers significantly to affect production, the
concomitant volatility of crude oil prices and increasing public and
governmental concern over air emissions, waste product disposal, fuel quality
and the environmental effects of fossil-fuel use in general.
In addition, any future scientific advances concerning new sources of energy
and fuels or legislative changes relating to the energy industry or the
environment could have a negative impact on the petroleum products industry.
While legislation has been enacted to deregulate certain aspects of the oil
industry, no assurances can be given that new or additional regulations will
not be adopted. Each of the problems referred to could adversely affect the
financial stability of the issuers of any petroleum industry stocks in the
Trusts. The Trusts may also include securities which are issued by companies
engaged in the exploration for and mining of various minerals, including coal,
and/or the manufacture, transportation, or marketing of chemical products and
plastics. The problems faced by such companies are similar to those discussed
with regard to petroleum companies.
22
<PAGE>
OTHER EQUITY RISKS. Since the Equity Securities included in the United
Kingdom Trust and the Hong Kong Trust (the "Foreign Trusts") consist of
securities of foreign issuers, an investment in these Trusts involves some
investment risks that are different in some respects from an investment in the
United States Trust which invests entirely in the securities of domestic
issuers. These investment risks include future political or governmental
restrictions which might adversely affect the payment or receipt of payment of
dividends on the relevant Equity
Securities, the possibility that the financial
condition of the issuers of the Equity Securities may become impaired or that
the general condition of the relevant stock market may worsen (both of which
contribute directly to a decrease in the value of the Equity Securities and
thus in the value of the Units) the limited liquidity and relatively small
market capitalization of the relevant securities market, expropriation or
confiscatory taxation, economic
uncertainties and foreign currency devaluations
and fluctuations. In addition, for foreign issuers that are not subject to the
reporting requirements of the Securities Exchange Act of 1934, there may be
less publicly available information than is available from a domestic issuer.
Also, foreign issuers are not necessarily subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic issuers. The securities of many
foreign issuers are less liquid and their prices more volatile than securities
of comparable domestic issuers. In addition, fixed brokerage commissions and
other transaction costs on foreign securities exchanges are generally higher
than in the United States and there is generally less government supervision
and regulation of exchanges, brokers and issuers in foreign countries than
there is in the United States. However,
due to the nature of the issuers of the
Equity Securities selected for the Foreign Trusts, the Sponsor believes that
adequate information will be available to allow the Supervisor to provide
portfolio surveillance for each Trust.
Equity securities issued by non-U.S. issuers generally pay dividends in
foreign currencies, and are principally traded in foreign currencies.
Therefore, there is a risk that the United States dollar value of these
securities will vary with fluctuations in the U.S. dollar foreign exchange
rates for the various Equity Securities. See "Exchange Rate" below.
On the basis of the best information available to the Sponsor at the present
time, none of the Equity Securities in either the United Kingdom or Hong Kong
Trusts are subject to exchange control restrictions under existing law which
would materially interfere with payment to the Trusts of dividends due on, or
proceeds from the sale of, the Equity Securities. However, there can be no
assurance that exchange control regulations might not be adopted in the future
which might adversely affect payment to
either Trust. In addition, the adoption
of exchange control regulations and other legal restrictions could have an
adverse impact on the marketability of international securities in the Foreign
Trusts and on the ability of such Trusts to satisfy their obligation to redeem
Units tendered to the Trustee for redemption.
Investors should be aware that it may not be possible to buy all Equity
Securities at the same time because of the unavailability of any Equity
Security, and restrictions applicable to
the Trusts relating to the purchase of
an Equity Security by reason of the federal securities laws or otherwise.
Foreign securities generally have not been registered under the Securities
Act of 1933 and may not be exempt from the registration requirements of the
Act. Sales of non-exempt Equity Securities by a Trust in the United States
securities markets are subject to severe restrictions and may not be
practicable. Accordingly, sales of these Equity Securities by a Trust will
generally be effected only in foreign securities markets. Although the Sponsor
does not believe that a Trust will encounter obstacles in disposing of the
Equity Securities, investors should realize that the Equity Securities may be
traded in foreign countries where the securities markets are not as developed
or efficient and may not be as liquid as those in the United States. The value
of the Equity Securities will be adversely affected if trading markets for the
Equity Securities are limited or absent.
FOREIGN TRUST INFORMATION. The information provided below details certain
important factors which impact the economies of both the United Kingdom and
Hong Kong. This information has been extracted from various governmental and
private publications, but no representation can be made as to its accuracy;
23
<PAGE>
furthermore, no representation is made that any correlation exists between the
economies of the United Kingdom and Hong Kong and the value of the Equity
Securities held by the United Kingdom and Hong Kong Trusts, respectively.
United Kingdom. The emphasis of United Kingdom's economy is in the private
services sector, which includes the wholesale and retail sector, banking,
finance, insurance, and tourism. Services as a whole account for a majority of
the United Kingdom's gross national product and makes a significant
contribution to the country's balance of payments. The economy of the United
Kingdom is in the midst of a recovery which, by historical standards, will
remain slow, reflecting economic weakness in continental Europe and tightening
fiscal policy. Economic growth of 2.4% is expected for 1994 resulting from
lower interest rates and a weaker British pound, made possible by the
government's decision to leave the
European Community's Exchange Rate Mechanism
(ERM). Economic growth will be adversely affected by the negative economic
impact of increased taxes and sluggish exports to continental Europe, due to
its lingering recession. Approximately 60% of British exports are sold to
continental Europe. The negative economic impact of tax increases will be
partially offset by a decision of the Bank of England to ease monetary policy
due to low inflation rates. The United Kingdom Base Rate has recently dropped
from 6% to 5.5%, and is expected to be maintained at that level. British
inflation fell from 9.5% in 1990 to a 30-year low of 1.2% in mid-1993.
Inflation has since picked up to approximately 2%. Unemployment, while
relatively high at 10.3%, is stable and expected to gradually decline.
The United Kingdom is a member of the European Economic Community (the
"EEC"). It had been expected that by the
end of 1992 many remaining barriers to
free trade among the 12 member nations of the EEC would be removed, making
Europe one of the largest common markets in the world. However, infighting
among various EEC members has led to delays in economic unification. Certain
barriers to trade, notably barriers in the agricultural industry, have proven
difficult to remove and thus slow considerably the process of market
integration. The future pace and extent of the removal of these trade barriers
is uncertain. The recent rapid political and social change throughout Europe
make the extent and nature of future
economic development in the United Kingdom
and Europe and the impact of such development upon the value of the Equity
Securities in the United Kingdom Trust impossible to predict at present.
Volatility in oil prices could slow economic development throughout Western
Europe; moreover, it is not possible accurately to predict the effect of the
current political and economic situation upon long-term inflation and balance
of trade cycles and how these changes would affect the currency exchange rate
between the U.S. dollar and the British pound sterling.
Hong Kong. Hong Kong, established as a British colony in the 1840's, is
currently ruled by the British Government through an appointed Governor. The
Hong Kong government generally follows a
laissez-faire policy towards industry.
There are no major import, export or foreign exchange restrictions. Regulation
of business is generally minimal with certain exceptions, including regulated
entry into certain sectors of the economy and a fixed exchange rate regime by
which the Hong Kong dollar has been pegged to the U.S. Dollar. Over the ten
year period between 1982 and 1992, real gross domestic product increased at an
average annual rate of approximately 6%, with real gross domestic product
increasing 5.4% in 1993.
In December, 1984, Great Britain and China signed an agreement (the "Sino-
British Accord") under which Hong Kong will revert to Chinese sovereignty
effective July 1, 1997. Although China has committed by treaty to preserve for
50 years the economic and social freedoms currently enjoyed in Hong Kong, the
continuation of the economic system in Hong Kong after the reversion will be
dependent on the Chinese government. China has declared that all contracts
negotiated by the current Hong Kong
government with the private sector would be
void upon the reversion to Chinese
sovereignty, unless specifically approved by
China. In 1991 the Chinese government obtained a "memorandum of understanding"
from Britain which allows China veto power over all public work and industrial
projects sponsored by the Colony which are scheduled for completion in 1997 or
beyond. This veto power has allowed China to stall construction of Hong Kong's
new $20 billion airport facility,
24
<PAGE>
resulting in substantial costs to the British, in order to win additional
concessions prior to the British departure. Any increase in uncertainty as to
the future economic status of Hong Kong could have a materially adverse effect
on the value of the Equity Securities in the Hong Kong Trust.
China currently enjoys a most favored nation status ("MFN Status") from the
United States. Revocation of the MFN Status would have a severe effect on
China's trade. Every year since 1989, when pro-democracy demonstrators were
crushed in Beijing, the United States has threatened to end China's trade
privileges unless there were substantial human rights improvements for the
Chinese. In the past, minimal human rights improvements were sufficient to
maintain MFN Status. As of the date of this Prospectus representatives of the
United States government stated that China had not yet reached the level of
reform necessary for the Clinton Administration to renew MFN Status when a
decision is made in June of 1994. The loss of MFN Status for China would
adversely affect Hong Kong in several important ways. As the main processor of
China's external trade, Hong Kong's
domestic economy would suffer a substantial
loss of income by virtue of reduced trade between China and the United States.
Additionally, Hong Kong would lose from the effects of slower growth in China
resulting in lower incomes for Hong Kong's companies on the mainland.
Securities prices on the Hong Kong Exchange and, specifically the Hang Seng
Index, can be highly volatile and are sensitive to developments in Hong Kong
and China, as well as other world markets. For example, in 1989, the Hang Seng
Index dropped 1,216 points (approximately 58%) in early June following the
events at Tiananmen Square. The Hang
Seng Index gradually climbed in subsequent
months but fell by 181 points on October 13, 1989 (approximately 6.5%)
following a substantial fall in the U.S. stock markets. Despite these events,
the Hang Seng 1989 year-end closing price of 2,837 was ahead of its 1988 year-
end level.
The Hong Kong Trust is considered to be concentrated in common stocks of
companies engaged in real estate asset management, development, leasing,
property sale and other related activities. Investment in securities issued by
these real estate companies should be made with an understanding of the many
factors which may have an adverse impact on the equity securities of a
particular company or industry. Generally, these include economic recession,
the cyclical nature of real estate
markets, competitive overbuilding, unusually
adverse weather conditions, changing demographics, changes in governmental
regulations (including tax laws and environmental, building, zoning and sales
regulation), increases in real estate
taxes or costs of material and labor, the
inability to secure performance guarantees or insurance as required, the
unavailability of investment capital and the inability to obtain construction
financing or mortgage loans at rates acceptable to builders and purchasers of
real estate. With recent Chinese economic development and reform, certain Hong
Kong real estate companies and other investors began purchasing and developing
real estate in southern China. By 1992, however, southern China began to
experience a rise in real estate prices and construction costs, a growing
supply of real estate and a tightening of credit markets. Any worsening of
these conditions could affect the
profitability and financial condition of Hong
Kong real estate companies and could have a materially adverse effect on the
value of the Hong Kong Trust.
EXCHANGE RATE. The Foreign Trusts are
comprised of Equity Securities that are
principally traded in foreign currencies and as such involve investment risks
that are substantially different from an investment in a fund which invests in
securities that are principally traded in United States dollars. The United
States dollar value of a portfolio (and hence of the Units) and of the
distributions from the portfolio will vary with fluctuations in the United
States dollar foreign exchange rates for the relevant currencies. Most foreign
currencies have fluctuated widely in
value against the United States dollar for
many reasons, including supply and demand of the respective currency, the rate
of inflation in the respective economies compared to the United States, the
impact of interest rate differentials between different currencies on the
movement of foreign currency rates, the
balance of imports and exports of goods
and services, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and other
countries.
25
<PAGE>
The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty, which established a system of fixed
exchange rates and the convertibility of the United States dollar into gold
through foreign central banks. Starting in 1971, growing volatility in the
foreign exchange markets caused the United States to abandon gold
convertibility and to effect a small devaluation of the United States dollar.
In 1973, the system of fixed exchange rates between a number of the most
important industrial countries of the world, among them the United States and
most Western European countries, was completely abandoned. Subsequently, major
industrialized countries have adopted "floating" exchange rates, under which
daily currency valuations depend on supply and demand in a freely fluctuating
international market. Many smaller or developing countries have continued to
"peg" their currencies to the United
States dollar although there has been some
interest in recent years in "pegging" currencies to "baskets" of other
currencies or to a Special Drawing Right administered by the International
Monetary Fund. Since 1983, the Hong Kong dollar has been pegged to the U.S.
dollar. In Europe a European Currency Unit ("ECU") has been developed.
Currencies are generally traded by leading international commercial banks and
institutional investors (including corporate treasurers, money managers,
pension funds and insurance companies). From time to time, central banks in a
number of countries also are major buyers and sellers of foreign currencies,
mostly for the purpose of preventing or reducing substantial exchange rate
fluctuations.
Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of actual
and proposed government policies on the value of currencies, interest rate
differentials between the currencies and the balance of imports and exports of
goods and services and transfers of income and capital from one country to
another. These economic factors are influenced primarily by a particular
country's monetary and fiscal policies (although the perceived political
situation in a particular country may have an influence as well--particularly
with respect to transfers of capital). Investor psychology may also be an
important determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative strength or
weakness of a particular currency may sometimes exercise considerable
speculative influence on currency
exchange rates by purchasing or selling large
amounts of the same currency or currencies. However, over the long term, the
currency of a country with a low rate of inflation and a favorable balance of
trade should increase in value relative to the currency of a country with a
high rate of inflation and deficits in the balance of trade.
The following tables set forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and end of
month equivalent U.S. dollar rates of exchange for the United Kingdom pound
sterling and the Hong Kong dollar:
<TABLE>
FOREIGN EXCHANGE RATES
RANGE OF FLUCTUATIONS IN FOREIGN CURRENCIES
<CAPTION>
UNITED
KINGDOM POUND HONG
ANNUAL STERLING/U.S. KONG/U.S.
PERIOD DOLLAR DOLLAR
------ ------------- ---------
<S> <C> <C>
1983 0.616-0.707 6.480-8.700
1984 0.670-0.864 7.774-8.050
1985 0.672-0.951 7.729-7.990
1986 0.643-0.726 7.768-7.819
1987 0.530-0.680 7.751-7.822
1988 0.525-0.601 7.764-7.912
1989 0.548-0.661 7.775-7.817
1990 0.504-0.627 7.740-7.817
1991 0.499-0.624 7.716-7.803
1992 0.499-0.667 7.697-7.781
1993 0.630-0.705 7.722-7.766
</TABLE>
26
<PAGE>
<TABLE>
END OF MONTH EXCHANGE RATES FOR FOREIGN CURRENCIES
<CAPTION>
UNITED
KINGDOM POUND HONG
MONTHLY STERLING/U.S. KONG/U.S.
PERIOD DOLLAR DOLLAR
------- ------------- ---------
<S> <C> <C>
1991
December .535 7.781
1992
January .559 7.762
February .569 7.761
March .576 7.740
April .563 7.757
May .546 7.749
June .525 7.731
July .519 7.732
August .503 7.729
September .563 7.724
October .641 7.736
November .659 7.742
December .662 7.744
1993
January .673 7.734
February .701 7.734
March .660 7.731
April .635 7.730
May .640 7.724
June .671 7.743
July .674 7.761
August .670 7.755
September .668 7.734
October .676 7.733
November .673 7.725
December .677 7.723
1994
January .668 7.725
</TABLE>
The Trustee will estimate current exchange rates for the relevant currencies
based on activity in the various currency exchange markets. However, since
these markets are volatile and are constantly changing, depending on the
activity at any particular time of the large international commercial banks,
various central banks, large
multi-national corporations, speculators and other
buyers and sellers of foreign currencies, and since actual foreign currency
transactions may not be instantly
reported, the exchange rates estimated by the
Trustee may not be indicative of the amount in United States dollars a Trust
would receive had the Trustee sold any particular currency in the market. The
foreign exchange transactions of a Trust will be concluded by the Trustee with
foreign exchange dealers acting as principals on a spot (i.e., cash) buying
basis. Although foreign exchange dealers
trade on a net basis they do realize a
profit based upon the difference between
the price at which they are willing to
buy a particular currency (bid price) and the price at which they are willing
to sell the currency (offer price).
27
<PAGE>
TAXATION
- -----------------------------------------------------------------------------
UNITED STATES FEDERAL TAXATION
General. The following is a general discussion of certain of the federal
income tax consequences of the purchase, ownership and disposition of the
Units. The summary is limited to
investors who hold the Units as capital assets
(generally, property held for
investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986 (the "Code"). Unitholders should consult
their tax advisers in determining the federal, state, local and any other tax
consequences of the purchase, ownership and disposition of Units in a Trust.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. Each Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro
rata portion of the assets of a Trust under the Code; and the income of
each Trust will be treated as income of the Unitholders thereof under the
Code. Each Unitholder will be considered to have received his pro rata
share of income derived from each Security when such income is received by
a Trust.
2. Each Unitholder will have a taxable event when a Trust disposes of a
Security (whether by sale, exchange, redemption, or otherwise) or upon the
sale or redemption of Units by such Unitholder. The price a Unitholder pays
for his Units, including sales charges, is allocated among his pro rata
portion of each Security held by a Trust (in proportion to the fair market
values thereof on the date the Unitholder purchases his Units) in order to
determine his initial cost for his pro rata portion of each Security held
by a Trust. 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 a Security held by a Trust is taxable as ordinary income to the
extent of such corporation's current and accumulated "earnings and
profits." A Unitholder's pro rata portion of dividends paid on such
Security which exceed such current and accumulated earnings and profits
will first reduce a Unitholder's tax basis in such Security, and to the
extent that such dividends exceed a Unitholder's tax basis in such Security
shall generally be treated as capital gain. In general, any such capital
gain will be short-term unless a Unitholder has held his Units for more
than one year.
3. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by a Trust will generally be
considered a capital gain except in the case of a dealer or a financial
institution 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 a 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. However,
a Rollover Unitholder's loss, if any, incurred in connection with the
exchange of Units for Units in the next new series of the Strategic Ten
Trust (the "1995 Fund") will generally be disallowed with respect to the
disposition of any Securities pursuant to such exchange to the extent that
such Unitholder is considered the owner of substantially identical
securities under the wash sale provisions of the Code taking into account
such Unitholder's deemed ownership of the securities underlying the Units
in the 1995 Fund in the manner described above, if such substantially
identical securities were acquired within a period beginning 30 days before
and ending 30 days after such disposition. However, any gains incurred in
connection with such an exchange by a Rollover Unitholder would be
recognized. Unitholders should consult their tax advisers regarding the
recognition of gains and losses for federal income tax purposes.
4. The Code provides that "miscellaneous itemized deductions" are
allowable only to the extent that they exceed two percent of an individual
taxpayer's adjusted gross income. Miscellaneous itemized deductions subject
to this limitation under present law include a Unitholder's pro rata share
of expenses paid by the Trust, including fees of the Trustee and the
Sponsor.
28
<PAGE>
Dividends Received Deduction. A
corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such
Unitholder's pro rata portion of dividends received by a Trust (to the extent
such dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such
corporation directly owned the Securities paying such dividends. However, a
corporation owning Units should be aware
that Sections 246 and 246A of the Code
impose additional limitations on the eligibility of dividends for the 70%
dividends received deduction. These limitations include a requirement that
stock (and therefore Units) must generally be held at least 46 days (as
determined under Section 246(c) of the Code). Proposed regulations have been
issued which address special rules that must be considered in determining
whether the 46 day holding period requirement is met. Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable
to indebtedness incurred by such corporation. It should be noted that various
legislative proposals that would affect the dividends received deduction have
been introduced. Unitholders should consult with their tax advisers with
respect to the limitations on and possible modifications to the dividends
received deduction.
To the extent dividends received by a Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
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 (although losses incurred by Rollover Unitholders may be
subject to disallowance, as discussed above). For taxpayers other than
corporations, net capital gains 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 affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed.
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated
rate. Because some or all capital gains
are taxed at a comparatively lower rate
under the Tax Act, the Tax Act includes a provision that recharacterizes
capital gains as ordinary income in the case of certain financial transactions
that are "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and
prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
Special Tax Consequences of In Kind
Distributions Upon Redemption of Units or
Termination of the United States Trust. As discussed in "Rights of
Unitholders--Redemption of Units," under certain circumstances a Unitholder in
the United States Trust tendering Units for redemption may request an In Kind
Distribution. A Unitholder in the United States Trust may also under certain
circumstances request an In Kind Distribution upon the termination of such
Trust. See "Rights of Unitholders--Redemption of Units." The Unitholder
requesting an In Kind Distribution will be liable for expenses related thereto
(the "Distribution Expenses") and the amount of such In Kind Distribution will
be reduced by the amount of the Distribution Expenses. See "Rights of
Unitholders--Redemption of Units." As previously discussed, prior to the
redemption of Units or the termination of such Trust, a Unitholder is
considered as owning a pro rata portion of each of such Trust assets for
federal income tax purposes. The receipt of an In Kind Distribution would be
deemed an exchange of such Unitholder's pro rata portion of each of the shares
of stock and other assets held by the United States Trust in exchange for an
undivided interest in whole shares of stock plus, possibly, cash.
There are generally three different potential tax consequences which may
occur under an In Kind Distribution with respect to each Security owned by the
United States Trust. A "'Security" for this purpose is a particular class of
stock issued by a particular
corporation. If the Unitholder receives only whole
shares of a
29
<PAGE>
Security in exchange for his or her pro rata portion in each share of such
Security held by the United States Trust, there is no taxable gain or loss
recognized upon such deemed exchange pursuant to Section 1036 of the Code. If
the Unitholder receives whole shares of
a particular Security plus cash in lieu
of a fractional share of such Security, and if the fair market value of the
Unitholder's pro rata portion of the shares of such Security exceeds his tax
basis in his pro rata portion of such Security, taxable gain would be
recognized in an amount not to exceed the amount of such cash received,
pursuant to Section 1031(b) of the Code. No taxable loss would be recognized
upon such an exchange pursuant to Section 1031(c) of the Code, whether or not
cash is received in lieu of a fractional share. Under either of these
circumstances, special rules will be applied under Section 1031(d) of the Code
to determine the Unitholder's tax basis in the shares of such particular
Security which he receives as part of the In Kind Distribution. Finally, if a
Unitholder's pro rata interest in a Security does not equal a whole share, he
may receive entirely cash in exchange for his pro rata portion of a particular
Security. In such case, taxable gain or loss is measured by comparing the
amount of cash received by the Unitholder with his tax basis in such Security.
Because the United States Trust will own many Securities, a Unitholder who
requests an In Kind Distribution will
have to analyze the tax consequences with
respect to each Security owned by the
United States Trust. In analyzing the tax
consequences with respect to each Security, such Unitholder may allocate the
Distribution Expenses among the Securities (the "Allocable Expenses"). The
Allocable Expenses will reduce the amount realized with respect to each
Security so that the fair market value of the shares of such Security received
(if any) and cash received in lieu thereof (as a result of any fractional
shares) by such Unitholder should equal the amount realized for purposes of
determining the applicable tax consequences in connection with an In Kind
Distribution. A Unitholder's tax basis
in shares of such Security received will
be increased by the Allocable Expenses
relating to such Security. The amount of
taxable gain (or loss) recognized upon such exchange will generally equal the
sum of the gain (or loss) recognized under the rules described above by such
Unitholder with respect to each Security owned by such Trust. Unitholders who
request an In Kind Distribution are advised to consult their tax advisers in
this regard.
As discussed in "Rights of Unitholders--Special Redemption and Rollover in
New Fund," a Unitholder may elect to become a Rollover Unitholder. To the
extent a Rollover Unitholder exchanges his Units for units of the 1995 Fund in
a taxable transaction, such Unitholder will recognize gains, if any, but
generally will not be entitled to a
deduction for any loses recognized upon the
disposition of any Securities pursuant
to such exchange to the extent that such
Unitholder is considered the owner of substantially identical securities under
the wash sale provisions of the Code taking into account such Unitholder's
deemed ownership of the securities
underlying the units in the 1995 Fund in the
manner described above, if such substantially identical securities were
acquired within a period beginning 30
days before and ending 30 days after such
disposition under the wash sale provisions contained in Section 1091 of the
Code. In the event a loss is disallowed
under the wash sale provisions, special
rules contained in Section 1091(d) of the Code apply to determine the
Unitholder's tax basis in the securities acquired. Rollover Unitholders are
advised to consult their tax advisers.
Other Matters. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the
Unitholder has not been notified that
payments to the Unitholder are subject to
back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions by a
Trust to such Unitholder (including amounts received upon the redemption of
Units) will be subject to back-up withholding. Distributions by a Trust (other
than those that are not treated as United States source income, if any) will
generally be subject to United States income taxation and withholding in the
case of Units held by non-resident alien individuals, foreign corporations or
other non-United States persons. Such persons should consult their tax
advisers.
It should be noted that payments to the Trusts of dividends on Equity
Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes and Unitholders should consult their tax advisers
regarding the potential tax consequences relating to the payment of any such
withholding taxes by
30
<PAGE>
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.
At the termination of a Trust, the
Trustee will furnish to each Unitholder of
such Trust an annual statement
containing information relating to the dividends
received by such Trust on the Securities, the gross proceeds received by such
Trust from the disposition of any Security (resulting from redemption or the
sale of any Security), and the fees and expenses paid by such Trust. The
Trustee will also furnish annual information returns to Unitholders and to the
Internal Revenue Service.
Dividend income and long-term capital gains may also be subject to state and
local taxes. Investors should consult their tax advisers for specific
information on the tax consequences of particular types of distributions.
Unitholder desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of Tanner Propp & Farber, special counsel to the Fund for New
York tax matters, each Trust is not an
association taxable as a corporation and
the income of the Trusts will be treated
as the income of the Unitholders under
the existing income tax laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("U.S. Unitholders") with regard to federal and certain aspects of
New York State and City income taxes.
Unitholders may be subject to taxation in
New York or in other jurisdictions and
should consult their own tax advisers in
this regard. As used herein, the term "U.S. Unitholder" means an owner of a
Unit in one of the Trusts that (a) is (i) for United States federal income tax
purposes a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source or (b) is not a U.S. Unitholder and whose income from
a Unit is effectively connected with such Unitholder's conduct of a United
States trade or business. The term also
includes certain former citizens of the
United States whose income and gain on the Units will be taxable.
UNITED KINGDOM TAXATION
Tax Consequences of Ownership of Ordinary Shares. In the opinion of
Linklaters & Paines, London special counsel to the Sponsor, based on the terms
of the United Kingdom Trust as described in the Prospectus and on certain
representations made by special U.S. counsel to the Sponsor, the following
summary accurately describes the U.K. tax consequences to U.S. Unitholders of
Units of the United Kingdom Trust. This
summary is based upon current U.S. law,
U.K. law and Inland Revenue practice in the U.K., the Treaty and the U.S./U.K.
convention relating to estate and gift taxes (the "Estate Tax Treaty"). It
assumes that the relevant provisions of the Finance Bill currently before the
U.K. Parliament will be enacted in this year's Finance Act as proposed. The
summary is a general guide only and is subject to any changes in U.K. or U.S.
law, or the practice relating thereto and in the Treaty or Estate Tax Treaty
occurring after the date of this Prospectus which may affect (including
possibly on a retroactive basis) the tax consequences described herein.
Accordingly, Unitholders should consult their tax advisers as the U.K. tax
consequences of ownership of the Units of the United Kingdom Trust applicable
to their particular circumstances.
Taxation of Dividends. Where a U.K. resident receives a dividend from a U.K.
corporation, such resident is generally entitled to a tax credit, which may be
offset against such resident's U.K. taxes, or, in certain circumstances,
repaid. Under the Treaty, a U.S.
Unitholder, may, in appropriate circumstances,
be entitled to
31
<PAGE>
a repayment of that tax credit, but such repayment is subject to withholding
tax at the rate of 15% of the sum of the
dividend and the credit. The credit is
equal to one quarter of the dividend
(the "Tax Credit Amount"). Although a U.S.
Unitholder who held shares in a U.K.
corporation directly could generally claim
a refund of a portion of the Tax Credit Amount attributable to the dividend (a
"Treaty Payment") pursuant to the terms of the Treaty, the ability of a
Unitholder of Units in the United Kingdom Trust to claim such a Treaty Payment
is unclear where dividend payments are made directly to an entity such as the
United Kingdom Trust. Any claim for such a Treaty Payment would have to be
supported by evidence of each Unitholder's entitlement to the relevant
dividend. There is no established procedure for proving such entitlement where
the U.K. corporation pays the dividend to a person such as the United Kingdom
Trust unless a specific procedure is
negotiated in advance with the U.K. Inland
Revenue. The Trustee has determined that it is impracticable to claim such
Treaty Payments on behalf of Unitholders and will not incur any further
expenses in assisting Unitholders in
this respect. Therefore, in the absence of
the Trustee's cooperation, Unitholders
who are U.S. persons may not in practice
be able to claim a Treaty Payment from the U.K. Inland Revenue.
In the November 1993 Budget, the U.K. Chancellor of the Exchequer announced
proposals under which U.K. companies could pay "foreign income dividends". If
these proposals are enacted in the form of the consultative document which
preceded the Chancellor's announcement, then a company could elect to pay a
foreign income dividend rather than an ordinary dividend. If a company whose
shares were held in the United Kingdom
Trust paid a foreign income dividend, no
tax credit would be attributable to it. Accordingly, a U.S. Unitholder would
not be entitled to any repayment of a tax credit under the Treaty.
Taxation of Capital Gains. U.S. Unitholders who are not resident or
ordinarily resident for tax purposes in the U.K. will not be liable for U.K.
tax on capital gains realized on the disposal of their Units unless such units
are used, held or acquired for the purposes of a trade, or professional
vocation carried on in the U.K. through a branch or agency which constitutes a
permanent establishment or fixed base as defined in the Treaty or for the
purposes of such branch or agency.
A U.S. Unitholder who is liable for both U.K. capital gains tax or U.K.
corporation tax on chargeable gains and
U.S. tax on a gain on the disposal of a
unit will generally be entitled, subject to certain limitations, to credit the
U.K. tax against its U.S. federal income
tax liability in respect of such gain.
U.K. Inheritance Tax. An individual Unitholder who is domiciled in the U.S.
for the purposes of the Estate Tax
Treaty and who is not a national of the U.K.
for the purposes of the Estate Tax
Treaty will generally not be subject to U.K.
inheritance tax in respect of Units in the United Kingdom Trust on the
individual's death or on a gift of such Units during the individual's lifetime
provided that any applicable U.S.
federal gift or estate tax liability is paid,
unless the Units are part of the
business property of a permanent establishment
of the individual in the U.K. or pertain
to a fixed base in the U.K. used by an
individual for the performance of independent personal services. Where the
Units have been placed in trust by a settlor, the Units will generally not be
subject to U.K. inheritance tax unless the settlor, at the time of settlement,
was not domiciled in the U.S. or was a U.K. national. In the exceptional case
where the Units are subject both to U.K. inheritance tax and to U.S. federal
gift or estate tax, the Estate Tax Treaty generally provides for the tax paid
in the U.K. to be credited against tax paid in the U.S. or for tax paid in the
U.S. to be credited against tax payable
in the U.K. based on priority rules set
out in that Treaty.
HONG KONG TAXATION
The Sponsor has been advised that the following summary accurately describes
the Hong Kong tax consequences under existing law to U.S. Unitholders of Units
of the Hong Kong Trust. This discussion is for general purposes only and
assumes that such Unitholder is not
carrying on a trade, profession or business
in Hong Kong and has no profits sourced in Hong Kong arising from the carrying
on of such trade, profession or
32
<PAGE>
business. Unitholders should consult
their tax advisers as to the Hong Kong tax
consequences of ownership of the Units of the Hong Kong Trust applicable to
their particular circumstances.
Taxation of Dividends. Amounts in
respect of dividends paid to Unitholders of
the Hong Kong Trust are not taxable and therefore will not be subject to the
deduction of any withholding tax.
Profits tax. A Unitholder of the Hong Kong Trust (other than a person
carrying on a trade, profession or business in Hong Kong) will not be subject
to profits tax on any gain or profits
made on the realization or other disposal
of his units.
Hong Kong Estate Duty. Units of the Hong Kong Trust will not give rise to a
liability to Hong Kong estate duty.
FUND OPERATING EXPENSES
- -----------------------------------------------------------------------------
INITIAL COSTS. 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 fees of an
evaluator and other out-of-pocket expenses, including brokerage fees incurred
in acquiring Securities for the United States Trust, have been borne by the
Sponsor at no cost to the Fund.
COMPENSATION OF SPONSOR AND EVALUATOR. The Sponsor will not receive any fees
in connection with its activities relating to the Fund. However, Van Kampen
Merritt Investment Advisory Corp., which is a wholly owned subsidiary 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", for providing portfolio supervisory services
for the Fund. Such fee (which is based on the number of Units of each Trust
outstanding on January 1 of each year for which such compensation relates
except during the initial offering period in which event the calculation is
based on the number of Units of each Trust outstanding at the end of the month
of such calculation) may exceed the actual costs of providing such supervisory
services for these Trusts, but at no time will the total amount received for
portfolio supervisory services rendered to Series 1 and subsequent series of
Van Kampen Merritt Equity Opportunity Trust and to any other unit investment
trusts sponsored by the Sponsor for which the Supervisor provides portfolio
supervisory services in any calendar year exceed the aggregate cost to the
Supervisor of supplying such services in such year. In addition, American
Portfolio Evaluation Services, which is a division of Van Kampen Merritt
Investment Advisory Corp., shall receive for regularly providing evaluation
services to the Fund the annual per Unit evaluation fee, payable in monthly
installments, set forth under "Summary of Essential Financial Information"
(which amount is based on the number of Units of each Trust outstanding at the
end of the month of such calculation) for regularly evaluating the Fund
portfolios. Both of the foregoing fees
may be increased without approval of the
Unitholders by amounts not exceeding
proportionate increases under the category
"All Services Less Rent of Shelter" in the Consumer Price Index published by
the United States Department of Labor or, if such category is no longer
published, in a comparable category. The
Sponsor will receive sales commissions
and may realize other profits (or losses) in connection with the sale of Units
and the deposit of the Securities as described under "Public Offering--Sponsor
and Other Compensation".
TRUSTEE'S FEE. For its services the Trustee will receive the annual per Unit
fee from each Trust set forth under "Summary of Essential Financial
Information" (which amount is based on the number of Units of each Trust
outstanding at the end of the month of such calculation). The Trustee's fees
are payable in monthly installments on or before the fifteenth day of each
month from the Income Account of each Trust to the extent funds are available
and then from the Capital Account of each Trust. The Trustee benefits to the
extent there are funds for future distributions, payment of expenses and
redemptions in the Capital and Income Accounts
33
<PAGE>
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 each Trust is expected to result from the use of these funds. Such
fees may be increased without approval of the Unitholders by amounts not
exceeding proportionate increases under
the category "All Services Less Rent of
Shelter" in the Consumer Price Index published by the United States Department
of Labor or, if such category is no
longer published, in a comparable category.
For a discussion of the services rendered by the Trustee pursuant to its
obligations under the Trust Agreement, see "Rights of Unitholders--Reports
Provided" and "Fund Administration."
MISCELLANEOUS EXPENSES. The following additional charges are or may be
incurred by a Trust: (a) normal expenses
(including the cost of mailing reports
to Unitholders) incurred in connection with the operation of such Trust, (b)
fees of the Trustee for extraordinary services, (c) expenses of the Trustee
(including legal and auditing expenses) and of counsel designated by the
Sponsor, (d) various governmental
charges, (e) expenses and costs of any action
taken by the Trustee to protect a Trust and the rights and interests of
Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of a Trust without negligence, bad
faith or wilful misconduct on its part, (g) foreign custodial and transaction
fees and (h) expenditures incurred in contacting Unitholders upon termination
of a Trust.
The fees and expenses set forth herein are payable out of each Trust. When
such fees and expenses are paid by or
owing to the Trustee, they are secured by
a lien on such Trust's portfolio. Since the Equity 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 Equity Securities to pay such amounts. These
sales may result in capital gains or losses to Unitholders. See "Taxation."
PUBLIC OFFERING
- -----------------------------------------------------------------------------
GENERAL. Units are offered at the Public Offering Price (which is based on
the aggregate underlying value of the Equity Securities and includes a sales
charge of 3.5% of the Public Offering Price--which charge is equivalent to
3.627% of the aggregate underlying value of the Securities). Such underlying
value shall include the proportionate share of any undistributed cash held in
the Capital and Income Accounts of a Trust. In the case of the United Kingdom
and Hong Kong Trusts, such underlying value is based on the aggregate value of
the Securities computed on the basis of
the offering side value of the relevant
currency exchange rate expressed in U.S. dollars as of the Evaluation Time
during the initial offering period and on the bid side value for secondary
market transactions and in each case includes the estimated costs of acquiring
or liquidating the Securities, as the case may be. The sales charge applicable
to quantity purchases is, during the initial offering period, reduced on a
graduated basis to any person acquiring 10,000 or more Units as follows:
<TABLE>
<CAPTION>
AGGREGATE
NUMBER U.S. DOLLAR AMOUNT OF SALES
OF UNITS PURCHASED CHARGE REDUCTION PER UNIT
------------------ ---------------------------
<S> <C>
10,000-24,999............................. $0.03
25,000-49,999............................. $0.05
50,000-99,999............................. $0.07
100,000 or more........................... $0.09
</TABLE>
The sales charge reduction will primarily be the responsibility of the
selling Underwriter, broker, dealer or agent. This reduced sales charge
structure will apply on all purchases by the same person from any one
Underwriter or dealer of units of Van Kampen Merritt-sponsored unit investment
trusts which are being offered in the initial offering period (a) on any one
day (the "Initial Purchase Date") or (b) on any day subsequent to the Initial
Purchase Date if (I) the units purchased are of a unit investment trust
purchased on the Initial Purchase Date,
and (2) the person purchasing the units
purchased a sufficient amount of units on the Initial Purchase
34
<PAGE>
Date to qualify for a reduced sales charge on such date. To determine the
applicable sales charge for units
purchased in accordance with (b) above, it is
necessary to accumulate all purchases
made on the Initial Purchase Date and all
purchases made in accordance with (b)
above. Units purchased in the name of the
spouse of a purchaser or in the name of a child of such purchaser under 21
years of age will be deemed for the purposes of calculating the applicable
sales charge to be additional purchases by the purchaser. The reduced sales
charges will also be applicable to a trustee or other fiduciary purchasing
securities for one or more trust estate or fiduciary accounts.
Employees of Van Kampen Merritt Inc. and its subsidiaries may purchase Units
of the Trusts at the current Public Offering Price less the underwriting
commission during the initial offering
period, and less the dealer's concession
for secondary market transactions. Registered representatives of selling
Underwriters may purchase Units of the Trusts at the current Public Offering
Price less the underwriting commission during the initial offering period, and
less the dealer's concession for secondary market transactions. Registered
representatives of selling brokers, dealers, or agents may purchase Units of
the Trusts at the current Public Offering Price less the dealer's concession
during the initial offering period and for secondary market transactions.
OFFERING PRICE. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of
Essential Financial Information" in accordance
with fluctuations in the prices of the underlying Securities in the Trusts. In
the case of the United Kingdom and Hong Kong Trusts, the Public Offering Price
per Unit is based on the aggregate value of the Securities computed on the
basis of the offering side or bid side value of the relevant currency exchange
rate expressed in U.S. dollars during the initial offering period or secondary
market, respectively, and in each case includes the estimated costs of
acquiring or liquidating the Securities.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate
underlying value of the Securities in each Trust
an amount equal to 3.627% of such value
and dividing the sum so obtained by the
number of Units in each Trust outstanding. Such underlying value shall include
the proportionate share of any cash held in the Capital Account in each Trust.
This computation produced a gross underwriting profit equal to 3.5% of the
Public Offering Price. Such price determination as of the close of business on
the day before the Initial Date of Deposit was made on the basis of an
evaluation of the Securities in the Trusts prepared by Interactive Data
Services, Inc., a firm regularly engaged
in the business of evaluating, quoting
or appraising comparable securities.
Thereafter, the Evaluator on each business
day will appraise or cause to be appraised the value of the underlying
Securities in the applicable Trust as of the relevant Evaluation Time and will
adjust the Public Offering Price of the
Units commensurate with such valuation.
Such Public Offering Price will be effective for all orders received prior to
the Evaluation Time on each such day.
Orders received by the Trustee or Sponsor
for purchases, sales or redemptions
after that time, or on a day which is not a
business day for the related Trust, will be held until the next determination
of price. The term "business day", as used herein and under "Rights of
Unitholders--Redemption of Units", shall exclude Saturdays, Sundays and the
following holidays as observed by the
New York Stock Exchange, Inc.: New Year's
Day, Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas Day. In
addition, for the United Kingdom Trust,
"business day" shall exclude the following U.K. holidays: Easter Monday, May
Day, Spring Bank Holiday, Summer Bank Holiday, and Boxing Day and for the Hong
Kong Trust "business day" shall exclude
the following Hong Kong holidays: Lunar
New Year's Day and the following day, Ching Ming Festival, Easter Monday,
Queen's Birthday and the following Monday, Tuen Ng Festival, Summer Bank
Holiday, Liberation Day, Chinese Mid-Autumn Festival and the following day,
Chang Yeung Festival and the two
weekdays following Christmas Day. Effective on
the following dates the secondary market sales charge (as a percentage of the
Public Offering Price) will be reduced to the following amounts: June 24,
1994--3.0%; July 24, 1994--2.75%; August 24, 1994--2.5%; and September 24,
1994--2.25%. The Sponsor currently does not intend to maintain a secondary
market after October 15, 1994.
35
<PAGE>
The value of the Equity Securities during the initial offering period is
determined on each business day by the Evaluator in the following manner: if
the Equity Securities are listed on a national securities exchange or the
NASDAQ National Market System, this evaluation is generally based on the
closing sale prices on that exchange or that system (unless it is determined
that these prices are inappropriate as a basis for valuation) or, if there is
no closing sale price on that exchange
or system, at the closing ask prices. If
the Equity Securities are not so listed or, if so listed and the principal
market therefore is other than on the exchange, the evaluation shall generally
be based on the current ask price on the over-the-counter market (unless it is
determined that these prices are inappropriate as a basis for evaluation). If
current ask prices are unavailable, the evaluation is generally determined (a)
on the basis of current ask prices for
comparable securities, (b) by appraising
the value of the Equity Securities on the ask side of the market or (c) by any
combination of the above. In the case of the United Kingdom and Hong Kong
Trusts, the value of the Equity Securities during the initial offering period
is based on the aggregate value of the Securities computed on the basis of the
offering side value of the relevant currency exchange rate expressed in U.S.
dollars as of the Evaluation Time and includes the costs of acquiring the
Securities.
In offering the Units to the public, neither the Sponsor nor any broker-
dealers are recommending any of the individual Securities in the Trusts but
rather the entire pool of Securities, taken as a whole, which are represented
by the Units.
UNIT DISTRIBUTION. During the initial offering period, Units will be
distributed to the public by the Sponsor, broker-dealers and others at the
Public Offering Price. Upon the completion of the initial offering period,
Units repurchased in the secondary market, if any, may be offered by this
Prospectus at the secondary market Public Offering Price in the manner
described above.
The Sponsor intends to qualify the Units for sale in a number of states.
Except as indicated under "Sponsor and Other Compensation" below, brokers,
dealers and others will be allowed a concession or agency commission in
connection with the distribution of
Units during the initial offering period of
2.0% per Unit. In addition, any firm
acquiring from the Sponsor at least 30,000
Units of the Fund during the initial offering period (net of any Units
repurchased by the Sponsor from such firm) will be allowed a concession or
agency commission of 2.3% per Unit for all Units such firm so acquires during
such period. Such concession or agency commission will be paid by the Sponsor
retroactively in connection with previously sold Units upon attaining the
30,000 Unit sales level. Any quantity discount provided to investors will be
borne by the selling dealer or agent as indicated under "General" above. For
secondary market transactions, such
concession or agency commission will amount
to 2.0% per Unit (70% of the applicable sales charge on and after June 24,
1994).
Certain commercial banks are making Units of the Trusts available to their
customers on an agency basis. A portion of the sales charge (equal to the
agency commission referred to above) is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Trust
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have not indicated that these particular agency
transactions are not permitted under such Act. In addition, state securities
laws on this issue may differ from the
interpretations of federal law expressed
herein and banks and financial institutions may be required to register as
dealers pursuant to state law.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 500 Units (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.
Brokers and dealers of a Trust, banks
and/or others are eligible to participate
in a program in which such firms receive from the Sponsor a nominal award for
each of
36
<PAGE>
their registered representatives who have sold a minimum number of units of
unit investment trusts created by the Sponsor during a specified time period.
In addition, at various times the Sponsor may implement other programs under
which the sales forces of brokers,
dealers, banks and/or others may be eligible
to win other nominal awards for certain sales efforts, or under which the
Sponsor will reallow to any such brokers, dealers, banks and/or others that
sponsor sales contests or recognition programs conforming to criteria
established by the Sponsor, or participate in sales programs sponsored by the
Sponsor, an amount not exceeding the total applicable sales charges on the
sales generated by such person at the public offering price during such
programs. Also, the Sponsor in its
discretion may from time to time pursuant to
objective criteria established by the Sponsor pay fees to qualifying brokers,
dealers, banks and/or others for certain services or activities which are
primarily intended to result in sales of Units of the Fund. Such payments are
made by the Sponsor out of its own assets and not out of the assets of the
Fund. These programs will not change the price Unitholders pay for their Units
or the amount that a Trust will receive from the Units sold.
SPONSOR AND OTHER COMPENSATION. The Sponsor will receive the gross sales
commission equal to 3.5% of the Public Offering Price of the Units, less any
reduced sales charge for quantity
purchases as described under "General" above.
Any such quantity discount provided to investors will be borne by the selling
dealer or agent.
In addition, the Sponsor will realize
a profit or will sustain a loss, as the
case may be, as a result of the difference between the price paid for the
Securities by the Sponsor and the cost of such Securities to each Trust on the
Initial Date of Deposit as well as on subsequent deposits. See "Portfolios."
The Sponsor has not participated as sole underwriter or as manager or as a
member of the underwriting syndicates or
as an agent in a private placement for
any of the Securities in the Trust portfolios. The Sponsor may further realize
additional profit or loss during the
initial offering period as a result of the
possible fluctuations in the market
value of the Securities in the Trusts after
a date of deposit, since all proceeds received from purchasers of Units
(excluding dealer concessions and agency commissions allowed, if any) will be
retained by the Sponsor. Brokers, dealers or others (each "a distributor") who
distribute 1,000,000 or more Units of a single Trust during the initial
offering period will receive additional compensation from the Sponsor, after
the close of the initial offering
period, of $0.005 for each Unit of that Trust
it distributes; or each distributor who distributes 2,000,000 or more Units of
a single Trust will receive additional compensation of $0.01 for each Unit of
that Trust it distributes; or each distributor who distributes 3,000,000 or
more Units of a single Trust will
receive additional compensation of $0.015 for
each Unit of that Trust it distributes; or each distributor of 4,000,000 or
more Units of a single Trust will receive additional compensation of $0.02 for
each Unit of that Trust it distributes. However, if a Trust exceeds 10,000,000
Units at the close of the initial offering period, in lieu of the additional
compensation referred to in the last clause of the preceding sentence, each
distributor of 4,000,000 or more Units of such Trust will receive additional
compensation from the Sponsor of $0.025 for each Unit of such Trust it
distributes; or each distributor who distributes 5,000,000 or more Units will
receive additional compensation of $0.03 for each Unit of such Trust it
distributes.
Cash, if any, made available to the Sponsor prior to the date of settlement
for the purchase of Units may be used in the Sponsor's business and may be
deemed to be a benefit to the Sponsor, subject to the limitations of the
Securities Exchange Act of 1934.
As stated under "Public Market" below, the Sponsor currently intends to
maintain a secondary market for Units of the Trusts for the period indicated.
In so maintaining a market, the Sponsor will also realize profits or sustain
losses in the amount of any difference between the price at which Units are
purchased and the price at which Units are resold (which price includes the
applicable sales charge). In addition,
the Sponsor will also realize profits or
sustain losses resulting from a
redemption of such repurchased Units at a price
above or below the purchase price for such Units, respectively.
37
<PAGE>
PUBLIC MARKET. Although it is not obligated to do so, the Sponsor currently
intends to maintain a market for the Units offered hereby through October 15,
1994 and offer continuously to purchase Units at prices, subject to change at
any time, based upon the aggregate
underlying value of the Equity Securities in
the Trusts (computed as indicated under "Offering Price" above and "Rights of
Unitholders--Redemption of Units"). In the case of the United Kingdom and Hong
Kong Trusts, the aggregate underlying value of the Equity Securities is
computed on the basis of the bid side value of the relevant currency exchange
rate (offer side during the initial
offering period) expressed in U.S. dollars.
If the supply of Units exceeds demand or
if some other business reason warrants
it, the Sponsor may either discontinue all purchases of Units or discontinue
purchases of Units at such prices. In
the event that a market is not maintained
for the Units and the Unitholder cannot find another purchaser, a Unitholder
desiring to dispose of his Units will be able to dispose of such Units by
tendering them to the Trustee for redemption at the Redemption Price. See
"Rights of Unitholders--Redemption of 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 the individuals, Simplified
Employee Pension Plans for employees, qualified plans for self-employed
individuals, and qualified corporate pension and profit sharing plans for
employees. The purchase of Units of the Trusts may be limited by the plans'
provisions and does not itself establish such plans. The minimum purchase in
connection with a tax-sheltered retirement plan is 100 Units.
RIGHTS OF UNITHOLDERS
- -----------------------------------------------------------------------------
CERTIFICATES. The Trustee is
authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trusts will be evidenced by certificates unless a
Unitholder or the Unitholder's
registered broker-dealer makes a written request
to the Trustee that ownership be in book entry. Units are transferable by
making a written request to the Trustee and, in the case of Units evidenced by
a certificate, by presentation and
surrender of such certificate to the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer. A Unitholder must sign such written request, and such certificate or
transfer instrument, exactly as his name appears on the records of the Trustee
and on the face of any certificate representing the Units to be transferred
with the signature guaranteed by a participant in the Securities Transfer
Agents Medallion Program ("STAMP") or
such other signature guarantee program in
addition to, or in substitution for, STAMP as may be accepted by the Trustee.
In certain instances the Trustee may require additional documents such as, but
not limited to, trust instruments, certificates of death, appointments as
executor or administrator or certificates of corporate authority. Certificates
will be issued in denominations of one Unit or any whole multiple thereof.
Although no such charge is now made or contemplated, the Trustee may require
a Unitholder to pay a reasonable fee for each certificate reissued or
transferred and to pay any governmental charge that may be imposed in
connection with each such transfer or
interchange. Destroyed, stolen, mutilated
or lost certificates will be replaced upon delivery to the Trustee of
satisfactory indemnity, evidence of
ownership and payment of expenses incurred.
Mutilated certificates must be surrendered to the Trustee for replacement.
DISTRIBUTIONS OF INCOME AND CAPITAL. Any dividends received by a Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account of such Trust. Other receipts (e.g., capital gains, proceeds
from the sale of Securities, etc.) are credited to the Capital Account of such
Trust. In the case of the United Kingdom and Hong Kong Trusts, dividends to be
credited to such accounts are first converted into U.S. dollars at the
applicable exchange rate.
38
<PAGE>
The Trustee will distribute any net income received with respect to any of
the Securities in a Trust on or about the Income Distribution Dates to
Unitholders of record on the preceding Income Record Dates. See "Summary of
Essential Financial Information." Proceeds received on the sale of any
Securities in a Trust, to the extent not used to meet redemptions of Units or
pay expenses, will be distributed annually on the Capital Account Distribution
Date to Unitholders of record on the preceding Capital Account Record Date.
Proceeds received from the disposition of any of the Securities after a record
date and prior to the following distribution date will be held in the Capital
Account of the appropriate Trust and not distributed until the next
distribution date applicable to such Capital Account. The Trustee is not
required to pay interest on funds held in the Capital or Income Accounts (but
may itself earn interest thereon and therefore benefits from the use of such
funds).
The distribution to Unitholders as of each record date will be made on the
following distribution date or shortly thereafter and shall consist of each
Unitholder's pro rata share of the cash in the Income Account after deducting
estimated expenses. Because dividends
are not received by a Trust at a constant
rate throughout the year, such distributions to Unitholders are expected to
fluctuate from distribution to distribution. Persons who purchase Units will
commence receiving distributions only
after such person becomes a record owner.
Notification to the Trustee of the transfer of Units is the responsibility of
the purchaser, but in the normal course of business such notice is provided by
the selling broker-dealer.
As of the fifteenth day of each month, the Trustee will deduct from the
Income Account and, to the extent funds are not sufficient therein, from the
Capital Account of the appropriate Trust amounts necessary to pay the expenses
of such Trust (as determined on the basis set forth under "Fund 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 each Trust. Amounts so withdrawn shall not be considered a part
of such Trust's assets until such time as the Trustee shall return all or any
part of such amounts to the appropriate accounts. In addition, the Trustee may
withdraw from the Income and Capital Accounts of the appropriate Trust such
amounts as may be necessary to cover redemptions of Units.
REINVESTMENT OPTION. Unitholders of a Trust may elect to have each
distribution of interest income, capital gains and/or principal on their Units
automatically reinvested in shares of any of the open ended mutual funds
(except for B shares) listed under "Fund Administration--Sponsor" 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 Merritt Inc.
at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. Texas residents who
desire to reinvest may request that a broker-dealer registered in Texas send
the prospectus relating to the respective fund.
After becoming a participant in a reinvestment plan, each distribution of
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, plus a sales charge of $1.00 per $100 of reinvestment
except if the participant selects the Van Kampen Merritt Money Market Fund or
the Van Kampen Merritt Tax Free Money Fund in which case no sales charge
applies. A minimum of one-half of such
sales charge would be paid to Van Kampen
Merritt Inc. for all Reinvestment Funds. Confirmations of all reinvestments by
a Unitholder into a Reinvestment Fund will be mailed to the Unitholder by such
Reinvestment Fund.
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A participant may at any time prior to five days preceding the next
succeeding distribution date, by so notifying the Trustee in writing, elect to
terminate his or her reinvestment plan and receive future distributions on his
or her Units in cash. There will be no charge or other penalty for such
termination. The Sponsor, each Reinvestment Fund, and its investment adviser
shall have the right to suspend or
terminate the reinvestment plan at any time.
REPORTS PROVIDED. The Trustee shall furnish Unitholders of a Trust in
connection with each distribution a statement of the amount of income and the
amount of other receipts (received since the preceding distribution), if any,
being distributed, expressed in each case as a dollar amount representing the
pro rata share of each Unit of a Trust outstanding. Within a reasonable period
of time after the end of each calendar year, the Trustee shall furnish to each
person who at any time during the calendar year was a registered Unitholder of
a Trust a statement (i) as to the Income Account: income received, deductions
for applicable taxes and for fees and expenses of such Trust, for redemptions
of Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (ii) as to the Capital Account: the
dates of disposition of any Securities
and the net proceeds received therefrom,
deductions for payment of applicable taxes, fees and expenses of such Trust
held for distribution to Unitholders of record as of a date prior to the
determination and the balance remaining
after such distributions and deductions
expressed both as a total dollar amount
and as a dollar amount representing the
pro rata share of each Unit outstanding on the last business day of such
calendar year; (iii) a list of the
Securities held by such Trust and the number
of Units of such Trust outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit of such Trust based upon the last
computation thereof made during such calendar year; and (v) amounts actually
distributed during such calendar year from the Income and Capital Accounts of
such Trust, separately stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in a Trust furnished to it by the Evaluator.
REDEMPTION OF UNITS. A Unitholder may
redeem all or a portion of his Units by
tender to the Trustee at its corporate
trust office at 101 Barclay Street, 20th
Floor, New York, New York 10286 and, in the case of Units evidenced by a
certificate, by tendering such certificate to the Trustee, duly endorsed or
accompanied by proper instruments of transfer with signature guaranteed as
described above (or by providing satisfactory indemnity, as in connection with
lost, stolen or destroyed certificates) and by payment of applicable
governmental charges, if any. No
redemption fee will be charged. On the seventh
calendar day following such tender, or if the seventh calendar day is not a
business day, on the first business day prior thereto, the Unitholder will be
entitled to receive in cash (unless the redeeming Unitholder in the United
States Trust elects an In Kind Distribution as described below) an amount for
each Unit equal to the Redemption Price
per Unit next computed after receipt by
the Trustee of such tender of Units and in the case of the Foreign Trusts
converted into U.S. dollars as of the Evaluation Time set forth under "Summary
of Essential Financial Information". The "date of tender" is deemed to be the
date on which Units are received by the Trustee, except that with respect to
Units received after the applicable Evaluation Time the date of tender is the
next business day as defined under "Public Offering--Offering Price" and such
Units will be deemed to have been tendered to the Trustee on such day for
redemption at the redemption price computed on that day. The London Stock
Exchange and the Hong Kong Exchange are open for trading on certain days which
are U.S. holidays on which the Fund will not transact business. The Securities
will continue to trade on those days and thus the value of the United Kingdom
and Hong Kong Trusts may be significantly affected on days when a Unitholder
cannot sell or redeem his Units.
The Trustee is empowered to sell
Securities of a Trust in order to make funds
available for redemption if funds are not otherwise available in the Capital
and Income Accounts of such Trust to meet redemptions. The
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Securities to be sold will be selected by the Trustee from those designated on
a current list provided by the Supervisor for this purpose. Units so redeemed
shall be cancelled.
Unitholders in the United States Trust tendering 2,500 or more Units for
redemption may request from the Trustee
in lieu of a cash redemption an in kind
distribution ("In Kind Distribution") of an amount and value of Securities per
Unit equal to the Redemption Price per Unit as determined as of the evaluation
next following the tender. An In Kind Distribution on redemption of Units will
be made by the Trustee through the distribution of each of the Securities in
book-entry form to the account of the Unitholder's bank or broker-dealer at
Depository Trust Company. The tendering Unitholder will receive his pro rata
number of whole shares of each of the Securities comprising the United States
Trust portfolio and cash from the Capital Account equal to the fractional
shares to which the tendering Unitholder is entitled. The Trustee may adjust
the number of shares of any issue of Securities included in a Unitholder's In
Kind Distribution to facilitate the distribution of whole shares, such
adjustment to be made on the basis of the value of Securities on the date of
tender. If funds in the Capital Account are insufficient to cover the required
cash distribution to the tendering Unitholder, the Trustee may sell Securities
according to the criteria discussed above.
To the extent that Securities are redeemed in kind or sold, the size of a
Trust will be, and the diversity of such Trust may be, reduced. Sales may be
required at a time when Securities would not otherwise be sold and may result
in lower prices than might otherwise be realized. The price received upon
redemption may be more or less than the
amount paid by the Unitholder depending
on the value of the Securities in the portfolio at the time of redemption.
Special U.S. federal income tax
consequences will result if a Unitholder in the
United States Trust requests an In Kind Distribution. See "Taxation."
The Redemption Price per Unit (as well as the secondary market Public
Offering Price) will be determined on the basis of the aggregate underlying
value of the Equity Securities in each Trust, plus or minus cash, if any, in
the Income and Capital Accounts of such Trust (net of applicable commissions
and stamp taxes in the case of the Foreign Trusts). On the Initial Date of
Deposit, the Public Offering Price per Unit (which includes the sales charge)
exceeded the values at which Units could have been redeemed by the amounts
shown under "Summary of Essential Financial Information." The Redemption Price
per Unit is the pro rata share of each Unit in each Trust determined on the
basis of (i) the cash on hand in such Trust, (ii) the value of the Securities
in such Trust and (iii) dividends receivable on the Equity Securities of such
Trust trading ex-dividend as of the date of computation, less (a) amounts
representing taxes or other governmental charges payable out of such Trust and
(b) the accrued expenses of such Trust. The Evaluator may determine the value
of the Equity Securities in a Trust in the following manner: if the Equity
Securities are listed on a national securities exchange or the NASDAQ National
Market System, this evaluation is
generally based on the closing sale prices on
that exchange or that system (unless it is determined that these prices are
inappropriate as a basis for valuation) or, if there is no closing sale price
on that exchange or system, at the
closing bid prices. If the Equity Securities
of a Trust are not so listed or, if so listed and the principal market
therefore is other than on the exchange, the evaluation shall generally be
based on the current bid price on the over-the-counter market (unless these
prices are inappropriate as a basis for evaluation). If current bid prices are
unavailable, the evaluation is generally
determined (a) on the basis of current
bid prices for comparable securities,
(b) by appraising the value of the Equity
Securities of such Trust on the bid side of the market or (c) by any
combination of the above. In the case of the United Kingdom and Hong Kong
Trusts, the value of the Equity Securities in the secondary market is based on
the aggregate value of the Securities computed on the basis of the bid side
value of the relevant currency exchange rate expressed in U.S. dollars as of
the Evaluation Time.
The right of redemption may be
suspended and payment postponed for any period
during which the New York Stock Exchange is closed, other than for customary
weekend and holiday closings, or any period during which the Securities and
Exchange Commission determines that trading on that Exchange is restricted or
an emergency exists, as a result of which disposal or evaluation of the
Securities in a Trust is not reasonably practicable, or for such other periods
as the Securities and Exchange Commission may by order permit.
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SPECIAL REDEMPTION AND ROLLOVER IN NEW FUND. It is expected that a special
redemption will be made of all Units of each Trust held by any Unitholder (a
"Rollover Unitholder") who affirmatively notifies the Trustee in writing that
he desires to rollover his Units by the
Rollover Notification Date specified in
the "Summary of Essential Financial Information."
All Units of Rollover Unitholders will be redeemed on the first day of the
Special Redemption Period and the underlying Securities will be distributed to
the Distribution Agent on behalf of the Rollover Unitholders. During the
Special Redemption Period (as set forth in "Summary of Essential Financial
Information"), the Distribution Agent will be required to sell all of the
underlying Securities on behalf of Rollover Unitholders. The sales proceeds
will be net of brokerage fees,
governmental charges or any expenses involved in
the sales.
The Distribution Agent will attempt to sell the Securities as quickly as is
practicable during the Special Redemption Period. The Sponsor does not
anticipate that the period will be longer than 10 business days, and it could
be as short as one day, given that the Securities are usually highly liquid.
However, certain of the factors
discussed under "Risk Factors" could affect the
ability of the Sponsor to sell the Securities of the United Kingdom or Hong
Kong Trusts and thereby affect the length of the sale period somewhat. The
liquidity of any Security depends on the daily trading volume of the Security
and the amount that the Sponsor has available for sale on any particular day.
It is expected (but not required) that the Distribution Agent will generally
follow the following guidelines in selling the Securities: for highly liquid
Securities, the Securities will generally be sold on the first day of the
Special Redemption Period; for less
liquid Securities, on each of the first two
days of the Special Redemption Period, the amount of any underlying Securities
will generally be sold at a price no less than 1/2 of one point under the
closing sale price of those Securities on the preceding day. Thereafter, the
Distribution Agent intends to sell without any price restrictions at least a
portion of the remaining underlying Securities, the numerator of which is one
and the denominator of which is the total number of days remaining (including
that day) in the Special Redemption Period.
The Rollover Unitholders' proceeds
will be invested in the next new series of
the Strategic Ten Trust (the "1995 Fund"), if then being offered, the
portfolios of which will contain the ten highest yielding stocks in the Dow
Jones Industrial Average, FT Index, and Hong Kong Index, respectively, as of a
day closely preceding the initial date of deposit of the 1995 Fund. The
proceeds of redemption available on each day will be used to buy 1995 Fund
units in the appropriate portfolio as the proceeds become available.
The Sponsor intends to create the 1995 Fund as quickly as possible after the
commencement of the Special Redemption Period, dependent upon the availability
and reasonably favorable prices of the Securities included in the 1995 Fund
portfolios, and it is intended that Rollover Unitholders will be given first
priority to purchase the 1995 Fund units. There can be no assurance, however,
as to the exact timing of the creation of the 1995 Fund units or the aggregate
number of 1995 Fund units in each trust portfolio which the Sponsor will
create. The Sponsor may, in its sole discretion, stop creating new units in
each trust portfolio at any time it
chooses, regardless of whether all proceeds
of the Special Redemption have been
invested on behalf of Rollover Unitholders.
Cash which has not been invested on behalf of the Rollover Unitholders in 1995
Fund units will be distributed at the end of the Special Redemption Period.
Any Rollover Unitholder may thus be redeemed out of the Fund and become a
holder of an entirely different unit investment trust in the 1995 Fund with a
different portfolio of Securities. The Rollover Unitholders' Units will be
redeemed and the distributed Securities shall be sold during the Special
Redemption Period. In accordance with the Rollover Unitholders' offer to
purchase the 1995 Fund units, the proceeds of the sales (and any other cash
distributed upon redemption) will be invested in the 1995 Fund in the
appropriate portfolio at the public offering price, including the applicable
sales charge per Unit (which for Rollover Unitholders is currently expected to
be 1.9% of the Public Offering Price of the 1995 Fund units).
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This process of redemption and
rollover into a new trust is intended to allow
for the fact that the portfolios selected by the Sponsor are chosen on the
basis of growth and income potential only for a year, at which point a new
portfolio is chosen. It is contemplated that a similar process of redemption
and rollover in new unit investment trusts will be available for the 1995 Fund
and each subsequent series of the Fund,
approximately a year after that Series'
creation.
The Sponsor believes that the gradual redemption and rollover in the
Strategic Ten Trust will help mitigate any negative market price consequences
stemming from the trading of large volumes of securities and of the underlying
Securities in the Strategic Ten Trust in a short, publicized period of time.
The above procedures may, however, be insufficient or unsuccessful in avoiding
such price consequences. In fact, market price trends may make it advantageous
to sell or buy more quickly or more slowly than permitted by these procedures.
Rollover Unitholders could then receive a less favorable average unit price
than if they bought all their units of the 1995 Fund on any given day of the
period.
It should also be noted that Rollover
Unitholders may realize taxable capital
gains on the Special Redemption and Rollover but, in certain unlikely
circumstances, will not be entitled to a reduction for certain capital losses
and, due to the procedures for investing
in the subsequent Strategic Ten Trust,
no cash would be distributed at that time to pay any taxes. Included in the
cash for the Special Redemption and Rollover will be an amount of cash
attributable to the last distribution of
dividend income; accordingly, Rollover
Unitholders also will not have such cash distributed to pay any taxes. See
"Taxation."
In addition, during this period a Unitholder will be at risk to the extent
that the Securities are not sold and will not have the benefit of any stock
appreciation to the extent that moneys
have not been invested; for this reason,
the Sponsor will be inclined to sell and purchase the Securities in as short a
period as they can without materially adversely affecting the price of the
Securities.
Unitholders who do not inform the Distribution Agent that they wish to have
their Units so redeemed and liquidated ("Remaining Unitholders") will continue
to hold Units of their Trust as described in this Prospectus until such Trust
is terminated or until the Mandatory Termination Date listed in the Summary of
Essential Information, whichever occurs
first. These Remaining Unitholders will
not realize capital gains or losses due to the Special Redemption and Rollover
and will not be charged any additional sales charge. If a large percentage of
Unitholders become Rollover Unitholders, the aggregate size of a Trust will be
sharply reduced and, as a consequence, expenses might constitute a higher
percentage amount per Unit of such Trust than prior to such Special Redemption
and Rollover. A Trust might also reduce to the Minimum Termination Value set
forth in the Summary of Essential Information because of the lesser number of
Units in such Trust, and possibly also due to a value reduction, however
temporary, in Units caused by the Sponsor's sales of Securities; if so, the
Sponsor could then choose to liquidate such Trust without the consent of the
remaining Unitholders. See "Fund
Administration--Amendment or Termination." The
Securities remaining in a Trust after the Special Redemption Period will be
sold by the Sponsor as quickly as
possible without, in its judgment, materially
adversely affecting the market price of the Securities.
The Sponsor may for any reason, in its
sole discretion, decide not to sponsor
the 1995 Fund or any subsequent series of the Fund, without penalty or
incurring liability to any Unitholder. If the Sponsor so decides, the Sponsor
shall notify the Unitholders before the Special Redemption Period would have
commenced. All Unitholders will then be Remaining Unitholders, with rights to
ordinary redemption as before. The Sponsor may modify the terms of the 1995
Fund or any subsequent series of the Fund. The Sponsor may also modify the
terms of the Special Redemption and Rollover in the 1995 Fund upon notice to
the Unitholders prior to the Rollover Notification Date specified in the
related "Summary of Essential Financial Information."
Investors should be aware that the staff of the Division of Investment
Management of the Securities and Exchange Commission is of the view that the
Rollover Option described in this Prospectus constitutes an "exchange offer"
for the purposes of Section 11(c) of the Investment Company Act of 1940 and
would
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therefore be prohibited absent an
exemptive order. The Sponsor intends to apply
for an exemptive order under Section 11(c) which would permit it to offer the
Rollover Option, but no assurance can be given that the SEC will issue such an
order.
FUND ADMINISTRATION
- -----------------------------------------------------------------------------
SPONSOR PURCHASES OF UNITS. The
Trustee shall notify the Sponsor of any Units
tendered for redemption. If the Sponsor's bid in the secondary market at that
time equals or exceeds the Redemption Price per Unit, it may purchase such
Units by notifying the Trustee before the close of business on the next
succeeding business day and by making payment therefor to the Unitholder not
later than the day on which the Units
would otherwise have been redeemed by the
Trustee. Units held by the Sponsor may be tendered to the Trustee for
redemption as any other Units.
The offering price of any Units acquired by the Sponsor will be in accord
with the Public Offering Price described in the then currently effective
prospectus describing such Units. Any profit resulting from the resale of such
Units will belong to the Sponsor which likewise will bear any loss resulting
from a lower offering or redemption
price subsequent to its acquisition of such
Units.
PORTFOLIO ADMINISTRATION. The
portfolios of the Fund are not "managed" by the
Sponsor, Supervisor or the Trustee; their activities described herein are
governed solely by the provisions of the Trust Agreement. Traditional methods
of investment management for a managed fund typically involve frequent changes
in a portfolio of securities on the basis of economic, financial and market
analyses. The Fund, however, will not be
managed. The Trust Agreement, however,
provides that the Sponsor may (but need not) direct the Trustee to dispose of
an Equity Security in certain events
such as the issuer having defaulted on the
payment on any of its outstanding obligations or the price of an Equity
Security has declined to such an extent or other such credit factors exist so
that in the opinion of the Sponsor the retention of such Securities would be
detrimental to a Trust. Pursuant to the Trust Agreement and with limited
exceptions, the Trustee may sell any
securities or other properties acquired in
exchange for Equity Securities such as those acquired in connection with a
merger or other transaction. If offered such new or exchanged securities or
property, the Trustee shall reject the offer. However, in the event such
securities or property are nonetheless acquired by a Trust, they may be
accepted for deposit in such Trust and either sold by the Trustee or held in
such Trust pursuant to the direction of
the Sponsor (who may rely on the advice
of the Supervisor). Proceeds from the sale of Securities (or any securities or
other property received by the Fund in exchange for Equity Securities) are
credited to the Capital Account for distribution to Unitholders or to meet
redemptions. Except as stated under "Trust Portfolios" for failed securities
and as provided in this paragraph, the
acquisition by a Trust of any securities
other than the Securities is prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above, the
Trustee may also sell Securities designated by the Supervisor, or if no such
designation has been made, in its own discretion, for the purpose of redeeming
Units of a Trust tendered for redemption and the payment of expenses.
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 in a Trust. To the extent this is not practicable, the
composition and diversity of the Equity Securities in such Trust may be
altered. In order to obtain the best
price for a Trust, it may be necessary for
the Supervisor to specify minimum amounts (generally 100 shares) in which
blocks of Equity Securities are to be sold.
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
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affect the Unitholders (as determined in good faith by the Sponsor and the
Trustee), provided, however, that the Trust Agreement may not be amended to
increase the number of Units (except as provided in the Trust Agreement). The
Trust Agreement may also be amended in any respect by the Trustee and Sponsor,
or
any of the provisions thereof may be waived, with the consent of the holders
representing 51% of the Units of a Trust then outstanding, provided that no
such amendment or waiver will reduce the interest in such Trust of any
Unitholder without the consent of such Unitholder or reduce the percentage of
Units required to consent to any such amendment or waiver without the consent
of all Unitholders. The Trustee shall advise the Unitholders of any amendment
promptly after execution thereof.
A Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Units of such Trust then
outstanding. A Trust will be liquidated
by the Trustee in the event that a
sufficient number of Units of such Trust not
yet sold are tendered for redemption by the Underwriters, including the
Sponsor, so that the net worth of such Trust would be reduced to less than 40%
of the value of the Securities at the time they were deposited in such Trust.
If a Trust is liquidated because of the redemption of unsold Units by the
Underwriters, the Sponsor will refund to each purchaser of Units the entire
sales charge paid by such purchaser. The Trust Agreement will terminate upon
the sale or other disposition of the last Security held thereunder, but in no
event will it continue beyond the Mandatory Termination Date stated under
"Summary of Essential Financial Information."
Commencing on the Mandatory
Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Fund. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. At least 30 days before the Mandatory Termination Date the Trustee
will provide written notice of any termination to all Unitholders of the
appropriate Trust and in the case of the United States Trust will include with
such notice a form to enable Unitholders owning 2,500 or more Units to request
an In Kind Distribution rather than payment in cash upon the termination of
such Trust. To be effective, this request must be returned to the Trustee at
least five business days prior to the Mandatory Termination Date. On the
Mandatory Termination Date (or on the next business day thereafter if a
holiday) the Trustee will deliver each requesting Unitholder's pro rata number
of whole shares of each of the Securities in the appropriate 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
Securities will be paid in cash. Unitholders with less than 2,500 Units,
Unitholders in the United States Trust with 2,500 or more Units not requesting
an In Kind Distribution and Unitholders who do not elect the Rollover Option
will receive a cash distribution from the sale of the remaining Securities
within a reasonable time following the Mandatory Termination Date. Regardless
of the distribution involved, the Trustee will deduct from the funds of the
appropriate Trust any accrued costs,
expenses, advances or indemnities provided
by the Trust Agreement, including estimated compensation of the Trustee, costs
of liquidation and any amounts required as a reserve to provide for payment of
any applicable taxes or other
governmental charges. Any sale of Securities in a
Trust upon termination may result in a lower amount than might otherwise be
realized if such sale were not required at such time. The Trustee will then
distribute to each Unitholder of each Trust his pro rata share of the balance
of the Income and Capital Accounts of such Trust.
The Sponsor currently intends to, but is not obligated to, offer for sale
units of a subsequent series of the Strategic Ten Trust pursuant to the
Rollover Option (see "Rights of
Unitholders--Special Redemption and Rollover in
New Fund"). There is, however, no assurance that units of any new series of
such Fund will be offered for sale at
that time, or if offered, that there will
be sufficient units available for sale to meet the requests of any or all
Unitholders.
Within 60 days of the final distribution Unitholders will be furnished a
final distribution statement, 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.
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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 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 Merritt Inc., a Delaware corporation, is the Sponsor of
the Fund. Van Kampen Merritt Inc. is primarily owned by Clayton, Dubilier &
Rice, Inc., a New York-based private investment firm. Van Kampen Merritt Inc.
management owns a significant minority
equity position. Van Kampen Merritt Inc.
specializes in the underwriting and distribution of unit investment trusts and
mutual funds. The Sponsor is a member of
the National Association of Securities
Dealers, Inc. and has its principal office at One Parkview Plaza, Oakbrook
Terrace, Illinois 60181 (708) 684-6000. It maintains a branch office in
Philadelphia and has regional representatives in Atlanta, Dallas, Los Angeles,
New York, San Francisco, Seattle and Tampa.
As of September 30, 1993, the total stockholders' equity of Van Kampen
Merritt Inc. was $200,885,000 (unaudited). (This paragraph relates only to the
Sponsor and not to the Van Kampen Merritt Equity Opportunity Trust or to any
series thereof or to any other Underwriter. The information is included herein
only for the purpose of informing investors as to the financial responsibility
of the Sponsor and its ability to carry out its contractual obligations. More
detailed financial information will be made available by the Sponsor upon
request.) As of November 30, 1993, the Sponsor and its affiliates managed or
supervised approximately $38.5 billion of investment products, of which over
$25 billion is invested in municipal
securities. The Sponsor and its affiliates
managed $23 billion of assets, consisting of $8.2 billion for 19 mutual funds,
$8.3 billion for 33 closed-end funds and $6.5 billion for 51 institutional
accounts. The Sponsor has also deposited approximately $23.5 billion of unit
investment trusts. Based on cumulative assets deposited, the Sponsor believes
that it is the largest sponsor of insured municipal unit investment trusts,
primarily through the success of its Insured Municipal Income Trust(R) or the
IM-IT(R) trust. The Sponsor also provides surveillance and evaluation services
at cost for approximately $15.5 billion of unit investment trust assets
outstanding. Since 1976, the Sponsor has opened over one million retail
investor accounts through retail
distribution firms. Van Kampen Merritt Inc. is
the sponsor of the various series of the trusts listed below and the
distributor of the mutual funds and closed-end funds listed below. Unitholders
may only invest in the trusts, mutual funds and closed-end funds which are
registered for sale in the state of residence of such Unitholder. In order for
a Unitholder to invest in the trusts, mutual
46
<PAGE>
funds and closed-end funds listed below, such Unitholder must obtain a
prospectus relating to the trust or fund involved. A prospectus is the only
means by which an offer can be delivered to investors.
<TABLE>
<CAPTION>
NAME OF TRUST TRUST INVESTMENT OBJECTIVE
------------- --------------------------
<S> <C>
Insured Municipals Income Tax-exempt income by investing in insured
Trust...................... municipal securities
California Insured Double tax-exemption for California residents by
Municipals Income Trust.... investing in insured California municipal
securities
New York Insured Municipals Double and in certain cases triple tax-exemption
Income Trust............... for New York residents by investing in insured
New York municipal securities
Pennsylvania Insured Double and in certain cases triple tax-exemption
Municipals Income Trust.... for Pennsylvania residents by investing in
insured Pennsylvania municipal securities
Insured Municipals Income Tax-exempt income by investing in insured
Trust, Insured Multi-Se- municipal securities; all issuers of bonds in a
ries....................... state trust are located in such state or in
(Premium Bond Series, Na- territories or possessions of the United States--
tional, Limited Maturity, providing exemptions from all state income tax
Intermediate, Short Inter- for residents of such state (except for the
mediate, Discount, Alabama, Oklahoma IM-IT Trust where a portion of the
Arizona, California, Cali- income of the Trust is subject to the Oklahoma
fornia Intermediate, Cali- state income tax)
fornia Intermediate
Laddered Maturity, Califor-
nia Premium, Colorado, Con-
necticut, Florida, Florida
Intermediate, Florida In-
termediate Laddered Maturi-
ty, Georgia, Louisiana,
Massachusetts, Massachu-
setts Premium, Michigan,
Michigan Intermediate,
Michigan Intermediate
Laddered Maturity, Michigan
Premium, Minnesota, Missou-
ri, Missouri Intermediate
Laddered Maturity, Missouri
Premium, New Jersey, New
Jersey Intermediate
Laddered Maturity, New Mex-
ico, New York, New York In-
termediate, New York Inter-
mediate Laddered Maturity,
New York Limited Maturity,
Ohio, Ohio Intermediate,
Ohio IM-IT Intermediate
Laddered Maturity, Ohio
Premium, Oklahoma, Pennsyl-
vania, Pennsylvania Inter-
mediate, Pennsylvania In-
termediate Laddered Maturi-
ty, Pennsylvania Premium,
Tennessee, Texas, Washing-
ton, West Virginia)
Insured Tax Free Bond Trust. Tax-exempt income by investing in insured
municipal securities
Insured Tax Free Bond Trust, Tax-exempt income by investing in insured
Insured Multi-Series....... municipal securities; all issuers of bonds in a
(National, Limited Maturi- state trust are located in such state--providing
ty, New York) exemptions from state income tax for residents of
such state
Investors' Quality Tax-Ex- Tax-exempt income by investing in municipal
empt Trust................. securities
Investors' Quality Tax-Ex- Tax-exempt income by investing in municipal
empt Trust, Multi-Series... securities; all issuers of bonds in a state trust
are located in such state or in territories or
possessions of the United States--providing
exemptions from state income tax for residents of
such state
(National, National AMT,
Intermediate, Alabama, Ari-
zona, Arkansas, California,
Colorado, Connecticut, Del-
aware, Florida, Georgia,
Kansas, Kentucky, Maine,
Maryland, Massachusetts,
Michigan, Minnesota, Mis-
souri, Nebraska, New Jer-
sey, New York, North Caro-
lina, Ohio, Oregon, Penn-
sylvania, South Carolina,
Virginia)
Investors' Quality Tax-exempt income for investors not subject to the
Municipals Trust, AMT Se- alternative minimum tax by investing in municipal
ries....................... securities, some or all of which are subject to
the Federal alternative minimum tax
Investors' Corporate Income Taxable income by investing in corporate bonds
Trust......................
Investors' Governmental Se- Taxable income by investing in government-backed
curities--Income Trust..... GNMA securities
Van Kampen Merritt Interna- High current income through an investment in a
tional Bond Income Trust... diversified portfolio of foreign currency
denominated corporate debt obligations
Van Kampen Merritt Insured High current income consistent with preservation
Income Trust............... of capital through a diversified investment in a
fixed portfolio of insured, long-term or
intermediate-term corporate debt securities
Van Kampen Merritt Utility High dividend income and capital appreciation by
Income Trust............... investing in common stock of electric utilities
Van Kampen Merritt Blue Chip Provide the potential for capital appreciation and
Opportunity Trust.......... income by investing in a portfolio of actively
traded, New York Stock Exchange listed equity
securities which are components of the Dow Jones
Industrial Average*
Van Kampen Merritt Blue Chip Protect Unitholders' capital and provide the
Opportunity and Treasury potential for capital appreciation and income by
Trust...................... investing a portion of its portfolio in "zero
coupon" U.S. Treasury obligations and the
remainder of the trust's portfolio in actively
traded, New York Stock Exchange listed equity
securities which at the time of the creation of
the trust were components of the Dow Jones
Industrial Average*
</TABLE>
- --------
*The Dow Jones Industrial Average is the property of Dow Jones & Company, Inc.
Dow Jones & Company, Inc. has not granted to this trust or the Sponsor a
license to use the Dow Jones Industrial Average.
47
<PAGE>
<TABLE>
<CAPTION>
NAME OF TRUST TRUST INVESTMENT OBJECTIVE
------------- --------------------------
<S> <C>
Van Kampen Merritt Emerging High current income consistent with preservation
Markets Income Trust....... of capital through a diversified investment in a
fixed portfolio primarily consisting of Brady
Bonds of emerging market countries that have
restructured sovereign debt pursuant to the
framework of the Brady Plan
Van Kampen Merritt Global Provide the potential for capital appreciation and
Telecommunications Trust... income consistent with the preservation of in-
vested capital, by investing in a portfolio of
equity securities which provide equipment for or
services to the telecommunications industry
Van Kampen Merritt Global Provide the potential for capital appreciation and
Energy Trust............... income consistent with the preservation of in-
vested capital, by investing in a portfolio of
equity securities diversified within the energy
industry
Strategic Ten Trust......... Provide an above average total return through a
(Hong Kong, United Kingdom, combination of potential capital appreciation and
and United States dividend income, consistent with preservation of
Portfolios) invested capital, by investing in a portfolio of
common stocks of the ten companies in a
recognized stock exchange index having the
highest dividend yields
</TABLE>
<TABLE>
<CAPTION>
NAME OF MUTUAL FUND FUND INVESTMENT OBJECTIVE
------------------- -------------------------
<S> <C>
Van Kampen Merritt U.S. Gov- High current income by investing in U.S.
ernment Fund................ Government securities
Van Kampen Merritt Insured High current income exempt from Federal income
Tax Free Income Fund........ taxes by investing in insured municipal
securities
Van Kampen Merritt Municipal High level of current income exempt from Federal
Income Fund................. income tax, consistent with preservation of
capital
Van Kampen Merritt Tax Free High current income exempt from Federal income
High Income Fund............ taxes by investing in medium and lower grade
municipal securities
Van Kampen Merritt California High current income exempt from Federal and
Insured Tax Free Fund....... California income taxes by investing in insured
California municipal securities
Van Kampen Merritt High Yield Provide a high level of current income by
Fund........................ investing in medium and lower grade domestic and
foreign government and corporate debt securities.
The Fund will seek capital appreciation as a
secondary objective
Van Kampen Merritt Growth and Long-term growth of both capital and dividend
Income Fund................. income by investing in dividend paying common
stocks
Van Kampen Merritt Pennsylva- High current income exempt from Federal and
nia Tax Free Income Fund.... Pennsylvania state and local income taxes by
investing in medium and lower grade Pennsylvania
municipal securities
Van Kampen Merritt Money Mar- High current income by investing in a broad range
ket Fund.................... of money market instruments that will mature
within twelve months
Van Kampen Merritt Tax Free High current income exempt from Federal income
Money Fund.................. taxes by investing in a broad range of municipal
securities that will mature within twelve months
Van Kampen Merritt Short-Term High current income by investing in a global
Global Income Fund.......... portfolio of high quality debt securities
denominated in various currencies having
remaining maturities of not more than three years
Van Kampen Merritt Adjustable High level of current income with a relatively
Rate U.S. Government Fund... stable net asset value investing in U.S.
Government securities
Van Kampen Merritt Limited High level of current income exempt from federal
Term Municipal Income Fund.. income tax, consistent with preservation of
capital
</TABLE>
<TABLE>
<CAPTION>
NAME OF CLOSED-END FUND FUND INVESTMENT OBJECTIVE
----------------------- -------------------------
<S> <C>
Van Kampen Merritt Municipal High current income exempt from Federal income
Income Trust................ taxes with safety of principal by investing in a
diversified portfolio of investment grade
municipal securities
Van Kampen Merritt California High current income exempt from Federal and
Municipal Trust............. California income taxes with safety of principal
by investing in a diversified portfolio of
investment grade California municipal securities
Van Kampen Merritt Intermedi- High current income while seeking to preserve
ate Term High Income Trust.. shareholders' capital by investing in a
diversified portfolio of high yield fixed income
securities
Van Kampen Merritt Limited High current income while seeking to preserve
Term High Income Trust...... shareholders' capital by investing in a
diversified portfolio of high yield fixed income
securities
Van Kampen Merritt Prime Rate High current income, consistent with preservation
Income Trust................ of capital by investing in interests in floating
or variable rate senior loans
Van Kampen Merritt Investment High current income exempt from Federal income
Grade Municipal Trust....... tax, consistent with preservation of capital
Van Kampen Merritt Municipal High level of current income exempt from Federal
Trust....................... income tax, consistent with preservation of
capital
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
NAME OF CLOSED-END FUND FUND INVESTMENT OBJECTIVE
----------------------- -------------------------
<S> <C>
Van Kampen Merritt Califor- High current income exempt from Federal and
nia Quality Municipal California income taxes with safety of principal
Trust...................... by investing in a diversified portfolio of
investment grade California municipal securities
Van Kampen Merritt Florida High current income exempt from Federal income
Quality Municipal Trust.... taxes and Florida intangible personal property
taxes with safety of principal by investing in a
diversified portfolio of investment grade Florida
municipal securities
Van Kampen Merritt New York High current income exempt from Federal as well as
Quality Municipal Trust.... New York State and New York City income taxes
with safety of principal by investing in a
diversified portfolio of investment grade New
York municipal securities
Van Kampen Merritt Ohio High current income exempt from Federal and Ohio
Quality Municipal Trust.... income taxes with safety of principal by
investing in a diversified portfolio of
investment grade Ohio municipal securities
Van Kampen Merritt Pennsyl- High current income exempt from Federal and
vania Quality Municipal Pennsylvania income taxes with safety of
Trust...................... principal by investing in a diversified portfolio
of investment grade Pennsylvania municipal
securities
Van Kampen Merritt Trust for High level of current income exempt from Federal
Investment Grade income tax, consistent with preservation of
Municipals................. capital
Van Kampen Merritt Trust for High level of current income exempt from Federal
Insured Municipals......... income tax, consistent with preservation of
capital by investing in a diversified portfolio
of municipal securities which are covered by
insurance with respect to timely payment of
principal and interest
Van Kampen Merritt Trust for High level of current income exempt from Federal
Investment Grade CA and California income taxes, consistent with
Municipals................. preservation of capital by investing in a
diversified portfolio of California municipal
securities
Van Kampen Merritt Trust for High level of current income exempt from Federal
Investment Grade FL income taxes, consistent with preservation of
Municipals................. capital. The Fund also seeks to offer its
Shareholders the opportunity to own securities
exempt from Florida intangible personal property
taxes
Van Kampen Merritt Trust for High level of current income exempt from Federal
Investment Grade NJ income taxes and New Jersey gross income taxes,
Municipals................. consistent with preservation of capital
Van Kampen Merritt Trust for High level of current income exempt from Federal
Investment Grade NY as well as from New York State and New York City
Municipals................. income taxes, consistent with preservation of
capital
Van Kampen Merritt Trust for High level of current income exempt from Federal
Investment Grade PA and Pennsylvania income taxes and, where possible
Municipals................. under local law, local income and property taxes,
consistent with preservation of capital
Van Kampen Merritt Municipal High level of current income exempt from Federal
Opportunity Trust.......... income tax, consistent with preservation of
capital by investing in a diversified portfolio
of municipal securities
Van Kampen Merritt Advantage High level of current income exempt from Federal
Municipal Income Trust..... income tax, consistent with preservation of
capital by investing in a diversified portfolio
of municipal securities
Van Kampen Merritt Advantage High level of current income exempt from Federal
Pennsylvania Municipal and Pennsylvania income taxes and, where possible
Income Trust............... under local law, local income and property taxes,
consistent with preservation of capital
Van Kampen Merritt Strategic Provide common shareholders with a high level of
Sector Municipal Trust..... current income exempt from Federal income taxes,
consistent with preservation of capital
Van Kampen Merritt Value Mu- High level of current income exempt from Federal
nicipal Income Trust....... income taxes, consistent with preservation of
capital
Van Kampen Merritt Califor- High level of current income exempt from Federal
nia Value Municipal Income and California income taxes, consistent with
Trust...................... preservation of capital
Van Kampen Merritt Massachu- High level of current income exempt from Federal
setts Value Municipal In- income taxes and Massachusetts personal income
come Trust................. taxes, consistent with preservation of capital
Van Kampen Merritt New Jer- High level of current income exempt from Federal
sey Value Municipal Income income taxes and New Jersey gross income tax,
Trust...................... consistent with preservation of capital
Van Kampen Merritt New York High level of current income exempt from Federal
Value Municipal Income as well as New York State and New York City
Trust...................... income taxes, consistent with preservation of
capital
Van Kampen Merritt Ohio High level of current income exempt from Federal
Value Municipal Income and Ohio income taxes, consistent with
Trust...................... preservation of capital
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
NAME OF CLOSED-END FUND FUND INVESTMENT OBJECTIVE
----------------------- -------------------------
<S> <C>
Van Kampen Merritt Pennsyl- High level of current income exempt from Federal
vania Value Municipal In- and Pennsylvania income taxes, consistent with
come Trust................. preservation of capital
Van Kampen Merritt Municipal High level of current income exempt from federal
Opportunity Trust II....... income tax, consistent with preservation of
capital
Van Kampen Merritt Florida High level of current income exempt from federal
Municipal Opportunity income tax, consistent with preservation of
Trust...................... capital. The Fund seeks to offer its common
shareholders the opportunity to own securities
exempt from Florida intangible personal property
taxes
Van Kampen Merritt Advantage Provide common shareholders with a high level of
Municipal Income Trust II.. current income exempt from federal income tax,
consistent with preservation of capital
Van Kampen Merritt Select To provide common shareholders with a high level
Sector Municipal Trust..... of current income exempt from federal income tax,
consistent with preservation of capital
</TABLE>
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting
or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
TRUSTEE. The Trustee is The Bank of
New York, a trust company organized under
the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286 (800) 221-7668. The Bank of New York is
subject to supervision and examination by the Superintendent of Banks of the
State of New York and the Board of
Governors of the Federal Reserve System, and
its deposits are insured by the Federal Deposit Insurance Corporation to the
extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolios.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for each Trust. Such
records shall include the name and address of, and the number of Units of each
Trust held by, every Unitholder of the Fund. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make
such annual or other reports as may from
time to time be required under any
applicable state or federal statute, rule or
regulation (see "Rights of Unitholders--Reports Provided"). The Trustee is
required to keep a certified copy or duplicate original of the Trust Agreement
on file in its office available for inspection at all reasonable times during
the usual business hours by any
Unitholder, together with a current list of the
Securities held in each Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less
than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor
trustee promptly. If, upon such resignation, no successor trustee has been
appointed and has accepted the appointment within 30 days after notification,
the retiring Trustee may apply to a court of competent jurisdiction for the
appointment of a successor. The Sponsor may remove the Trustee and appoint a
successor trustee as provided in the Trust Agreement at any time with or
without cause. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsor. Upon execution of a written acceptance of such
appointment by such successor trustee, all the rights, powers, duties and
obligations of the original trustee shall vest in the successor. The
resignation or removal of a Trustee becomes effective only when the successor
trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee.
50
<PAGE>
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. Tanner Propp & Farber has acted as counsel for the
Trustee.
INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS. The statements of condition and the
related securities portfolios at the Initial Date of Deposit included in this
Prospectus have been audited by Grant Thornton, independent certified public
accountants, as set forth in their report in this Prospectus, and are included
herein in reliance upon the authority of
said firm as experts in accounting and
auditing.
51
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Merritt Inc. and the Unitholders of
Van Kampen Merritt Equity Opportunity Trust, Series 7 (Strategic Ten
Trust):
We have audited the accompanying statements of condition and the related
portfolios of Van Kampen Merritt Equity Opportunity Trust, Series 7
(Strategic Ten Trust) as of March , 1994. The statements of condition and
portfolios are the responsibility of the Sponsor. Our responsibility is to
express an opinion on such financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of an irrevocable letter
of credit deposited to purchase securities by correspondence with the
Trustee. An audit also includes assessing the accounting principles used
and significant estimates made by the Sponsor, as well as evaluating the
overall financial statement presentation. We believe our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Van Kampen
Merritt Equity Opportunity Trust, Series 7 (Strategic Ten Trust) as of
March , 1994, in conformity with generally accepted accounting
principles.
Chicago, Illinois
March , 1994 GRANT THORNTON
<TABLE>
VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST
SERIES 7
STATEMENTS OF CONDITION
AS OF THE INITIAL DATE OF DEPOSIT: MARCH , 1994
- --------------------------------------------------------------------------------
<CAPTION>
UNITED UNITED
INVESTMENT IN SECURITIES: STATES KINGDOM HONG KONG
TRUST TRUST TRUST
---------- ---------- ----------
<S> <C> <C> <C>
Securities deposited.......................... $ $ $
Contracts to purchase securities(1)...........
---------- ---------- ----------
$ $ $
========== ========== ==========
INTEREST OF UNITHOLDERS:
Interest of Unitholders--
Units of fractional undivided interest out-
standing:
Cost to investors(2)....................... $ $ $
Less: Gross underwriting commission(2)........
---------- ---------- ----------
Net interest to Unitholders(2)............ $ $ $
========== ========== ==========
<FN>
<F1>The aggregate value of the Securities listed under "Portfolios" herein and
their cost to each Trust are the same. The value of the Securities is
determined by Interactive Data Services, Inc. on the bases set forth under
"Public Offering--Offering Price." The contracts to purchase Securities are
collateralized by an irrevocable letter of credit of $ which has
been deposited with the Trustee.
<F2>The aggregate public offering price and the aggregate sales charge of 3.5%
are computed on the bases set forth under "Public Offering--Offering Price"
and "Public Offering--Sponsor and Other Compensation" and assume all single
transactions involve less than 10,000 Units. For single transactions
involving 10,000 or more Units, the sales charge is reduced (see "Public
Offering--General") resulting in an equal reduction in both the Cost to
investors and the Gross underwriting commission while the Net interest to
Unitholders remains unchanged.<
</TABLE>
52
<PAGE>
<TABLE>
STRATEGIC TEN TRUST UNITED STATES PORTFOLIO, SERIES 1
PORTFOLIO (VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST, SERIES 7)
AS OF THE INITIAL DATE OF DEPOSIT: MARCH , 1994
--------------------------------------------------------------------------------
<CAPTION>
ESTIMATED
ANNUAL COST OF
NUMBER OF MARKET VALUE DIVIDENDS SECURITIES
SHARES NAME OF ISSUER(1)(4) PER SHARE(2) PER SHARE(2) TO TRUST(2)
--------- ------------------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
American Express Company
Chevron Corporation
Du Pont (E.I.) De
Nemours & Company
Eastman Kodak Company
Exxon Corporation
Merck & Company, Inc.
Minnesota Mining &
Manufacturing Company
Philip Morris Companies,
Inc.
Sears, Roebuck and
Company
Texaco, Inc.
Union Carbide
Corporation
United Technologies
Corporation
Westinghouse Electric
Corporation
Woolworth Corporation
------ ----------
$
==========
</TABLE>
<TABLE>
STRATEGIC TEN TRUST UNITED KINGDOM PORTFOLIO, SERIES 1
PORTFOLIO (VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST, SERIES 7)
AS OF THE INITIAL DATE OF DEPOSIT: MARCH , 1994
- ---------------------------------------------------------------------------------
<CAPTION>
ESTIMATED
ANNUAL COST OF
NUMBER OF MARKET VALUE DIVIDENDS SECURITIES
SHARES NAME OF ISSUER(1)(4) PER SHARE(2) PER SHARE(2) TO TRUST(2)
--------- ------------------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Allied Lyons Plc
Asda Group Plc
BICC Plc
Blue Circle Industries
Plc
BOC Group Plc
British Gas Plc
British Telecom Plc
GKN Plc
Glaxo Holdings Plc
Hanson Plc
Imperial Chemical
Industries
Lucas Industries Plc
National Westminster
Bank
Peninsular & Orient
Steam Navigation Company
SmithKline Beecham Plc
--------- --- --- ----------
$
==========
</TABLE>
53
<PAGE>
<TABLE>
STRATEGIC TEN TRUST HONG KONG PORTFOLIO, SERIES 1
PORTFOLIO (VAN KAMPEN MERRITT EQUITY OPPORTUNITY TRUST, SERIES 7)
AS OF THE INITIAL DATE OF DEPOSIT: MARCH , 1994
- --------------------------------------------------------------------------------
<CAPTION>
ESTIMATED
ANNUAL COST OF
NUMBER OF MARKET VALUE DIVIDENDS SECURITIES
SHARES NAME OF ISSUER(1)(4) PER SHARE(2) PER SHARE(2) TO TRUST(2)
--------- ------------------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Cathay Pacific Airways
China Light & Power
Company
Hang Lung Development
Company
Hang Seng Bank
Henderson Land
Development Company
Ltd.
Hong Kong Electric
Holdings Ltd.
Hong Kong Telecom
Hopewell Holdings
HSBC Holdings Plc
Hysan Development
Company Ltd.
Lai Sun Garment
(International) Ltd.
Shun Tak Holdings Ltd.
Sun Hang Kai Properties
Ltd.
Winsor Industrial Corpo-
------ ration Ltd. ----------
$
==========
</TABLE>
NOTES TO PORTFOLIOS
- -----------------------------------------------------------------------------
(1) All of the Securities are represented by "regular way" contracts for the
performance of which an irrevocable letter of credit has been deposited
with the Trustee, except a portion of the Securities marked by an "*"
(which were deposited with the Trustee on the Initial Date of Deposit). At
the Initial Date of Deposit, the
Sponsor has assigned to the Trustee all of
its right, title and interest in and to such Securities. Contracts to
acquire Securities were entered into on March , 1994 and March , 1994
and are expected to settle on or before March , 1994 and March , 1994
(see "The Fund").
(2) The market value of each of the Equity Securities is based on the closing
sale price of each Security on the
applicable exchange (converted into U.S.
dollars at the offer side of the exchange rate at the Evaluation Time and
includes the commissions and stamp taxes associated with acquiring the
Securities in the case of the United Kingdom and Hong Kong Trusts) on the
day prior to the Initial Date of Deposit. Estimated annual dividends are
based on the most recently paid dividends or, in the case of the United
Kingdom and Hong Kong Trusts, on the most recent interim and final
dividends (converted into U.S. dollars at the offer side of the exchange
rate at the Evaluation Time). Other
information regarding the Securities in
the Fund, as of the Initial Date of
Deposit (converted into U.S. dollars at
the offer side of the exchange rate at the Evaluation Time in the case of
the United Kingdom and Hong Kong Trusts), is as follows:
<TABLE>
<CAPTION>
PROFIT AGGREGATE
(LOSS) TO ESTIMATED ANNUAL
COST TO SPONSOR SPONSOR DIVIDENDS
--------------- --------- ----------------
<S> <C> <C> <C>
United States Trust $ $ $
United Kingdom Trust $ $ $
Hong Kong Trust $ $ $
</TABLE>
(3) Because this stock is of a securities-related issue, initial purchases do
not exceed 5% of the Trust's total assets; purchases of each of the other
stocks have been increased correspondingly.
(4) Certain of the Equity Securities listed will not be included in the final
portfolio. In addition, Equity
Securities not listed may be included in the
final portfolio depending upon the dividend yield of the Equity Securities
three days prior to the Initial Date of Deposit.
54
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
55
<PAGE>
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Fund, the Sponsor or the Underwriters. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, securities in any state
to any person to whom it is not lawful to make such offer in such state.
- ------------
<TABLE>
TABLE OF CONTENTS
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<CAPTION>
TITLE PAGE
----- ----
<S> <C>
Summary of Essential Financial Information................................. 4
The Fund................................................................... 5
Objectives and Securities Selection........................................ 6
Trust Portfolios........................................................... 7
Risk Factors............................................................... 20
Taxation................................................................... 28
Fund Operating Expenses.................................................... 33
Public Offering............................................................ 34
Rights of Unitholders...................................................... 38
Fund Administration........................................................ 44
Other Matters.............................................................. 51
Report of Independent Certified Public Accountants......................... 52
Statements of Condition.................................................... 52
Portfolios................................................................. 53
Notes to Portfolios........................................................ 54
</TABLE>
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This Prospectus contains information concerning the Fund and the Sponsor, but
does not contain all of the information set forth in the registration state-
ments and exhibits relating thereto, which the Fund has filed with the Securi-
ties 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.
(R) denotes a registered trademark of Van Kampen Merritt Inc.
P R O S P E C T U S
------------------------------
March , 1994
LOGO
------------------------(R)
VAN KAMPEN MERRITT
EQUITY OPPORTUNITY TRUST, SERIES 7
STRATEGIC TEN TRUST UNITED STATES PORTFOLIO, SERIES 1
UNITED KINGDOM PORTFOLIO, SERIES 1
HONG KONG PORTFOLIO, SERIES 1
LOGO
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Mellon Bank Center
1735 Market Street, Suite 1300
Philadelphia, Pennsylvania 19103
Please retain this Prospectus for future reference.
This Amendment of Registration Statement comprises the following
papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement (to be filed by amendment).
3.1 Opinion and consent of counsel as to legality of securities being
registered (to be filed by amendment).
3.2 Opinion and consent of counsel as to United Kingdom tax status of
securities being registered (to be filed by amendment).
4.1 Consent of Interactive Data Services, Inc. (to be filed by
amendment).
4.2 Consent of Independent Certified Public Acountants (to be filed by
amendment).
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen Merritt Equity Opportunity Trust, Series 7 has
duly caused this Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Chicago and State of Illinois on the 1st day of March, 1994.
Van Kampen Merritt Equity
Opportunity Trust, Series 7
By Van Kampen Merritt Inc.
By Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on February 28, 1994.
Signature Title
John C. Merritt Chairman, Chief Executive )
Officer and Director )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Stuart B. Ross Director )
Sandra A. Waterworth
(Attorney-in-fact*)
*An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trtust, Multi-Series 203 (File No. 33-
65744) and the same are hereby incorporated herein by this reference.
