File No. 33-58477 CIK #896973
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549-1004
POST-EFFECTIVE AMENDMENT NO. 4 TO FORM S-6
For Registration under the Securities Act of 1933 of
Securities of Unit Investment Trusts Registered on
Form N-8B-2
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 12
(Exact Name of Trust)
VAN KAMPEN FUNDS INC.
(Exact Name of Depositor)
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
(Complete address of Depositor's principal executive offices)
VAN KAMPEN FUNDS INC. CHAPMAN AND CUTLER
Attention: A. Thomas Smith III, General Counsel Attention: Mark J. Kneedy
One Parkview Plaza 111 West Monroe Street
Oakbrook Terrace, Illinois 60181 Chicago, Illinois 60603
(Name and complete address of agents for service)
( X ) Check if it is proposed that this filing will become effective on
April 26, 1999 pursuant to paragraph (b) of Rule 485.
SWISS BLUE CHIP STRATEGIC TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 12
- --------------------------------------------------------------------------------
PROSPECTUS PART ONE
NOTE: Part One of this Prospectus may not be distributed unless accompanied
by Part Two.
Please retain both parts of this Prospectus for future reference.
- --------------------------------------------------------------------------------
THE TRUST
The Swiss Blue Chip Strategic Trust, Series 1 (the "Trust" or "Swiss
Equity Trust") is one unit investment trust in the Van Kampen American Capital
Equity Opportunity Trust, Series 12 (the "Fund"). The Swiss Equity Trust offers
investors the opportunity to purchase Units representing proportionate interests
in a fixed, diversified portfolio of common stocks issued by companies located
in Switzerland which were traded on the Zurich, Basel, or Geneva stock exchanges
as of the Initial Date of Deposit (the "Equity Securities" or "Securities" ).
Unless terminated earlier, the Trust will terminate on May 16, 2001 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. Unless otherwise indicated, all
amounts herein are stated in U.S. dollars computed on the basis of the exchange
rate for Swiss francs.
PUBLIC OFFERING PRICE
The Public Offering Price per Unit is equal to the aggregate underlying
value of the Equity Securities plus or minus cash, if any, in the Capital and
Income Accounts, divided by the number of Units outstanding, plus the applicable
sales charge. See "Summary of Essential Financial Information" in this Part One.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is April 26, 1999
SWISS BLUE CHIP STRATEGIC TRUST, SERIES 1
Van Kampen American Capital Equity Opportunity Trust, Series 12
Summary of Essential Financial Information
As of March 4, 1999
Managing Underwriter: International Assets Advisory Corp.
Sponsor: Van Kampen Funds Inc.
Supervisor (1): Van Kampen Investment Advisory Corp.
(An affiliate of the Sponsor)
Sub-Supervisor (1): Global Assets Advisors, Inc.
Evaluator: American Portfolio Evaluation Services
(A division of an affiliate of the Sponsor)
Trustee: The Bank of New York
<TABLE>
<CAPTION>
Swiss
Blue Chip
Strategic
Trust
-----------------
<S> <C>
General Information
Number of Units 878,100
Fractional Undivided Interest in Trust per Unit 1/878,100
Public Offering Price:
Aggregate Value of Securities in Portfolio (2) $ 16,076,380
Aggregate Value of Securities per Unit (including accumulated dividends) $ 18.31
Sales charge 4.0% (4.167% of Aggregate Value of Securities excluding principal cash)
per Unit (4) $ .76
Public Offering Price per Unit (3)(4) $ 19.07
Redemption Price per Unit $ 18.31
Secondary Market Repurchase Price per Unit $ 18.31
Excess of Public Offering Price per Unit Over Redemption Price per Unit $ .76
Supervisor's Annual Supervisory Fee Maximum of $.007 per Unit
Evaluator's Annual Fee Maximum of $.0025 per Unit
Evaluations for purpose of sale, purchase or redemption of Units are made
as of close of the relevent stock market (generally 10:00 A.M. New York time.)
Initial Date of Deposit May 16, 1995
Mandatory Termination Date May 16, 2001
Minimum Termination Value
The 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 deposits has exceeded $15,000,000, then the Trust
Agreement may be terminated if the net asset value of such
Trust is less than $3,000,000.
Special Information
Calculation of Estimated Net Annual Dividends per Unit
Estimated Gross Annual Dividends per Unit $.18612
Less: Estimated Expenses per Unit $.02723
Estimated Net Annual Dividends per Unit $.15889
Trustee's Annual fee (5) $.008 per Unit
Income Distribution Record Date TENTH day of March, June, September and December.
Income Distribution Date TWENTY-FIFTH day of March, June, September and December.
Capital Account Record Date TENTH day of December.
Capital Account Distribution Date TWENTY-FIFTH day of March, June, September and December.
- --------------------------------------------------------------------------------
(1) Pursuant to a contractual arrangement with the Supervisor, Global Assets
Advisors, Inc. will provide to the Supervisor on an agency basis
supervisory services in return for the entire supervisory fee.
(2) Each Equity Security is valued at the closing sale price. The aggregate
value of Securities in the Trust represents the U.S. dollar value based on
the bid side value of the currency exchange rate for the Swiss Franc at the
Evaluation Time.
(3) Anyone ordering Units will have added to the Public Offering Price a pro
rata share of any cash in the Income and Capital Accounts.
(4) Effective on each May 23, commencing May 23, 1996, the secondary sales
charge will decrease by .5 of 1% to a minimum sales charge of 3.5%. See
"Public Offering-Offering Price" in Part Two.
(5) In addition, the Trustee will receive additional annual compensation,
payable in monthly installments of $0.30 per $1,000 of market value of
Equity Securities held in a sub-custodian account at month end.
</TABLE>
<TABLE>
PORTFOLIO
The Swiss Blue Chip Strategic Trust consists of 9 different issues of Equity
Securities, which are primarily actively traded, common stocks of companies
located in Switzerland which were listed on the Zurich, Basel or Geneva stock
exchanges as of the Initial Date of Deposit.
<CAPTION>
PER UNIT INFORMATION
1995 (1) 1996 1997 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value per Unit at beginning of period............ $ 9.43 $ 11.83 $ 12.05 $ 16.03
============ ============ ============ ============
Net asset value per Unit at end of period.................. $ 11.83 $ 12.05 $ 16.03 $ 19.91
============ ============ ============ ============
Distributions to Unitholders of investment income including
accumulated dividends paid on Units redeemed
(average Units outstanding for entire period)........... $ 0.04 $ 0.12 $ 0.18 $ 0.17
============ ============ ============ ============
Distributions to Unitholders from Equity Security
redemption proceeds (average Units
outstanding for entire period).......................... $ 0.02 $ 0.01 $ 1.90 $ --
============ ============ ============ ============
Unrealized appreciation (depreciation) of Equity Securities
(per Unit outstanding at end of period)................. $ 1.79 $ 0.14 $ 4.79 $ (3.43)
============ ============ ============ ============
Units outstanding at end of period......................... 2,000,000 1,945,000 1,868,750 932,600
- --------------------------------------------------------------------------------
(1) For the period from May 16, 1995 (date of deposit) through December 31,
1995.
</TABLE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen Funds Inc. and the Unitholders of Swiss
Blue Chip Strategic Trust, Series 1 (Van Kampen American Capital Equity
Opportunity Trust, Series 12):
We have audited the accompanying statements of condition (including the
analyses of net assets) and the related portfolio of the Swiss Blue Chip
Strategic Trust, Series 1 (Van Kampen American Capital Equity Opportunity Trust,
Series 12) as of December 31,1998 and the related statements of operations and
changes in net assets for the three years ended December 31, 1998. These
statements are the responsibility of the Trustee and the Sponsor. Our
responsibility is to express an opinion on such statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31,1998 by correspondence with the
Trustee. An audit also includes assessing the accounting principles used and
significant estimates made by the Trustee and the Sponsor, as well as evaluating
the overall financial statement presentation. We believe our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Swiss Blue Chip Strategic
Trust, Series 1 (Van Kampen American Capital Equity Opportunity Trust, Series
12) as of December 31, 1998, and the results of operations and changes in net
assets for the three years ended December 31, 1998, in conformity with generally
accepted accounting principles.
GRANT THORNTON LLP
Chicago, Illinois
March 12, 1999
<TABLE>
SWISS BLUE CHIP STRATEGIC TRUST, SERIES 1
Statements of Condition
December 31, 1998
<CAPTION>
Swiss
Blue Chip
Strategic
Trust
------------
<S> <C>
Trust property
Securities at market value, (cost $8,984,846) (note 1) ............................................. $ 18,575,653
Receivable for securities sold ..................................................................... 187,183
------------
$ 18,762,836
============
Liabilities and interest to Unitholders
Cash overdraft ..................................................................................... $ 153,404
Interest to Unitholders ............................................................................ 18,569,162
Redemptions payable ................................................................................ 40,270
------------
$ 18,762,836
============
Analyses of Net Assets
Interest of Unitholders (932,600 Units of fractional undivided interest outstanding)
Cost to original investors of 2,000,000 Units (note 1) ............................................. $ 21,229,516
Less initial underwriting commission (note 3) ................................................... 1,160,017
------------
20,069,499
Less redemption of 1,067,400 Units .............................................................. 18,857,499
------------
1,212,000
Undistributed net investment income
Net investment income ........................................................................... 994,709
Less distributions to Unitholders ............................................................... 859,384
------------
135,325
Realized gain (loss) on Security sale or redemption ................................................ 11,019,416
Unrealized appreciation (depreciation) of Securities (note 2) ...................................... 9,590,807
Distributions to Unitholders of Security sale or redemption proceeds ............................... (3,388,386)
------------
Net asset value to Unitholders ................................................................ $ 18,569,162
============
Net asset value per Unit (932,600 Units outstanding) .................................................. $ 19.91
============
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
SWISS BLUE CHIP STRATEGIC TRUST, SERIES 1
Statements of Operations
Years ended December 31,
<CAPTION>
1996 1997 1998
------------ ------------ -----------
<S> <C> <C> <C>
Investment Income
Dividend income.......................................................... $ 274,937 $ 406,757 $ 328,022
Expenses
Trustee fees and expenses............................................. 20,776 18,026 21,001
Evaluator fees........................................................ 5,176 5,192 5,124
Supervisory fees...................................................... 14,445 14,529 14,347
------------ ------------ -----------
Total expenses..................................................... 40,397 37,747 40,472
------------ ------------ -----------
Net investment income................................................. 234,540 369,010 287,550
Realized gain (loss) from Securities sale or redemption
Proceeds................................................................. 684,774 4,330,297 16,990,662
Cost..................................................................... 492,401 2,407,735 8,086,181
------------ ------------ -----------
Realized gain (loss).................................................. 192,373 1,922,562 8,904,481
Net change in unrealized appreciation (depreciation) of Securities........., 274,492 8,945,074 (3,200,854)
------------ ------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.......... $ 701,405 $11,236,646 $ 5,991,177
============ ============ ===========
Statements of Changes in Net Assets
Years ended December 31,
1996 1997 1998
------------ ------------ -----------
Increase (decrease) in net assets Operations:
Net investment income.................................................... $ 234,540 $ 369,010 $ 287,550
Realized gain (loss) on Securities sale or redemption.................... 192,373 1,922,562 8,904,481
Net change in unrealized appreciation (depreciation) of Securities....... 274,492 8,945,074 (3,200,854)
------------ ------------ -----------
Net increase (decrease) in net assets resulting from operations....... 701,405 11,236,646 5,991,177
Distributions to Unitholders from:
Net investment income.................................................... (230,512) (310,405) (252,631)
Securities sale or redemption proceeds................................... (19,850) (3,342,936) --
Redemption of Units......................................................... (675,600) (1,059,445) (17,122,454)
------------ ------------ -----------
Total increase (decrease)............................................. (224,557) 6,523,860 (11,383,908)
Net asset value to Unitholders
Beginning of period...................................................... 23,653,767 23,429,210 29,953,070
Additional Securities purchased from proceeds of Unit Sales.............. -- -- --
------------ ------------ -----------
End of period (including undistributed net investment income of
$42,801, $100,406 and $135,325, respectively)....................... $ 23,429,210 $29,953,070 $18,569,162
============ ============ ===========
The accompanying notes are an integral part of these statements.
</TABLE>
<TABLE>
SWISS BLUE CHIP STRATEGIC TRUST, SERIES 1 PORTFOLIO as of December 31, 1998
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Valuation of
Number Market Value Securities
of Shares Name of Issuer Per Share (Note 1)
- --------------- ------------------------------------------------------------------------------------ ----------------
<S> <C> <C> <C>
1,075 BBC Brown Boveri AG $ 1,171.2498 $ 1,259,094
- ------------------------------------------------------------------------------------------------------------------------
4,600 CS Holdings 156.4091 719,482
- ------------------------------------------------------------------------------------------------------------------------
4,485 Holderbank 250.2546 1,122,392
- ------------------------------------------------------------------------------------------------------------------------
1,290 Nestle SA 2,175.1782 2,805,980
- ------------------------------------------------------------------------------------------------------------------------
2,826 Novartis AG 1,964.2077 5,550,851
- ------------------------------------------------------------------------------------------------------------------------
156 Roche Holdings AG 12,192.6478 1,902,051
- ------------------------------------------------------------------------------------------------------------------------
1,115 Swiss Reinsurance 2,605.1214 2,904,710
- ------------------------------------------------------------------------------------------------------------------------
5,119 Union Bank of Switzerland 306.9984 1,571,525
- ------------------------------------------------------------------------------------------------------------------------
987 Zurich Insurance 749.3088 739,568
----------- ----------------
21,653 $ 18,575,653
=========== ================
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
SWISS BLUE CHIP STRATEGIC TRUST SERIES 1
Notes to Financial Statements
December 31, 1996, 1997 and 1998
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Security Valuation - Securities listed are valued at the last closing sales
price of the relevent stock exchanges.
Security Cost - The original cost to the Trust of the Securities was based on
the closing sale prices of the relevent stock exchanges. The cost was determined
on the day of the various Dates of Deposit.
Unit Valuation - The redemption price per Unit is the pro rata share of each
Unit based upon (1) the cash on hand in the Trust or monies in the process of
being collected, (2) the Securities in the Trust based on the value as described
in Note 1 and (3) accumulated dividends thereon, less accrued expenses of the
Trust, if any.
Federal Income Taxes - Each Unitholder is considered to be the owner of a pro
rata portion of the Trust and, accordingly, no provision has been made for
Federal Income Taxes.
Distributions to Unitholders of the Trust's taxable income will be taxable as
ordinary or capital gain income to Unitholders.
Other - The financial statements are presented on the accrual basis of
accounting. Any realized gains or losses from securities transactions are
reported on an identified cost basis.
NOTE 2 - PORTFOLIO
Unrealized Appreciation and Depreciation - An analysis of net unrealized
appreciation (depreciation) at December 31, 1998 is as follows:
Swiss
Blue Chip
Strategic
Trust
--------------
Unrealized Appreciation $ 9,590,807
Unrealized Depreciation --
--------------
$ 9,590,807
==============
NOTE 3 - OTHER
Marketability - Although it is not obligated to do so, the Managing
Underwriter intends to maintain a market for Units and to continuously offer to
purchase Units at prices, subject to change at any time, based upon the value of
the Securities in the portfolio of the Trust valued as described in Note 1, plus
accumulated dividends to the date of settlement. If the supply of Units exceeds
demand, or for other business reasons, the Managing Underwriter may discontinue
purchases of Units at such prices. In the event that a market is not maintained
for the Units, a Unitholder desiring to dispose of his Units may be able to do
so only by tendering such Units to the Trustee for redemption at the redemption
price.
Cost to Investors - The cost to original investors was based on the
underlying value of the Securities per Unit on the date of an investor's
purchase, plus a sales charge of 5.5% of the public offering price which is
equivalent to 5.820% of the aggregate offering price of the Securities. The
secondary market cost to investors is based on the determination of the
underlying value of the Securities per Unit on the date of an investor's
purchase plus a sales charge of 5.5% of the public offering price which is
5.820% of the underlying value of the Securities. Effective on each May 23,
commencing May 23, 1996, the secondary sales charge will decrease by .5 of 1% to
a minimum sales charge of 3.5%.
Compensation of Evaluator and Supervisor - The Supervisor receives a fee for
providing portfolio supervisory services for the Trust ($.007 per Unit, not to
exceed the aggregate cost of the Supervisor for providing such services to all
applicable Trusts). The Evaluator receives an annual fee for regularly
evaluating the Trust's portfolio. Both fees may be adjusted for increases under
the category "All Services Less Rent of Shelter" in the Consumer Price Index.
NOTE 4 - REDEMPTION OF UNITS
During the period ended December 31, 1996, 1997 and 1998, 55,000 Units,
76,250 Units and 936,150 Units, respectively, were presented for redemption.
SWISS BLUE CHIP STRATEGIC TRUST, SERIES 1
Prospectus Part Two
- --------------------------------------------------------------------------------
The Fund. Van Kampen American Capital Equity Opportunity Trust, Series 12
(the "Fund") is comprised of one underlying unit investment trust designated as
the Swiss Blue Chip Strategic Trust, Series 1 ("Swiss Equity Trust" or "Trust").
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a fixed, diversified portfolio of common stocks
issued by companies located in Switzerland traded on the Zurich, Basel or Geneva
stock exchanges as of the Initial Date of Deposit (the Securities" or
"Securities"). Unless terminated earlier, the Trust will terminate on May 16,
2001 (the "Mandatory Termination Date") and any Securities then held will,
within a reasonable time thereafter, be liquidated or distributed by the
Trustee. Any Securities liquidated at termination will be sold at the then
current market value for such Securities; therefore, the amount distributable in
cash to a Unitholder upon termination may be more or less than the amount such
Unitholder paid for his Units. Unless otherwise indicated, all amounts herein
are stated in U.S. dollars computed on the basis of the exchange rate for Swiss
francs on the date hereof.
Objective of the Trust. The objective of the 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 listed on the
Zurich, Basel or Geneva stock exchanges as of the Initial Date of Deposit and
issued by companies located in Switzerland. See "Portfolio" in Part One. There
is, of course, no guarantee that the objective of the Trust will be achieved.
Public Offering Price. The secondary market Public Offering Price of the
Trust will include the aggregate underlying value of the Securities in the
Trust, the applicable sales charge as described herein, and cash, if any, in the
Income and Capital Accounts held or owned by the Trust. The Public Offering
Price per Unit is based on the aggregate value of the Securities computed on the
basis of the bid side value of the currency exchange rate for Swiss francs
expressed in U.S. dollars. If Units were available for purchase at date thereof,
the Public Offering Price per Unit would have been that amount set forth under
"Summary of Essential Financial Information" in Part One. The minimum purchase
is 500 Units (100 Units for a tax-sheltered retirement plan). See "Public
Offering."
Dividend and Capital Distributions. Distributions of dividends and capital,
if any, received by the Trust will be paid in cash on the applicable
Distribution Date to Unitholders of record on the record date as set forth in
the "Summary of Essential Financial Information" in Part One. Any distribution
of income and/or capital will be net of the expenses of the Trust. See
"Taxation." Additionally, upon surrender of Units for redemption or termination
of the Trust, the Trustee will distribute to each Unitholder his pro rata share
of the 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, International
Assets Advisory Corp. (the "Managing Underwriter") currently intends to maintain
a market for Units of the Trust and offer to repurchase Units at prices which
are based on the aggregate underlying value of Equity Securities in the Trust
(generally determined by the closing sale prices of the Securities) plus or
minus cash, if any, in the Capital and Income Accounts of the Trust. If a
secondary market is not maintained, a Unitholder may redeem Units at prices
based upon the aggregate underlying value of the Equity Securities in the Trust
plus or minus a pro rata share of cash, if any, in the Capital and Income
Accounts of the Trust. See "Rights of Unitholders--Redemption of Units."
NOTE: THIS PROSPECTUS MAY BE USED ONLY WHEN ACCOMPANIED BY PART ONE.
Both parts of this Prospectus should
be retained for future reference. This Prospectus is
dated as of the date of the Prospectus Part I
accompanying this Prospectus Part II.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Termination. Commencing on the Mandatory Termination Date, Securities will
begin to be sold in connection with the termination of the Trust. The Sponsor
will determine the manner, timing and execution of the sale of the Securities.
Written notice of any termination of the Trust shall be given by the Trustee to
each Unitholder at his address appearing on the registration books of the Trust
maintained by the Trustee. At least 30 days prior to the Mandatory Termination
Date the Trustee will provide written notice thereof to all Unitholders.
Unitholders will receive a cash distribution from the sale of the remaining
Securities within a reasonable time after the Trust is terminated. See "Trust
Administration--Amendment or Termination."
Portfolio Supervision. Van Kampen Investment Advisory Corp., the Supervisor
for the Trust, has retained Global Assets Advisors, Inc. ("Global Assets
Advisors") as the Sub-Supervisor to provide research to the Supervisor and
perform portfolio supervisory services for the Trust. The Sponsor believes that
this arrangement is desirable in the present circumstances due to the complexity
of the foreign equity security markets and Global Assets Advisors' expertise in
providing equity research on individual foreign equity securities, emerging
markets and the foreign equity security markets in general. The Supervisor will
pay Global Assets Advisors the entire supervisory fee for providing these
services. See "Summary of Essential Financial Information" in Part One.
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including the possible deterioration of
either the financial condition of the issuers or the general condition of the
stock market and currency fluctuations, the lack of adequate financial
information concerning an issuer and exchange control restrictions impacting
foreign issuers. For certain risk considerations related to the Trust, see "Risk
Factors." Units of the Trust are not deposits or obligations of, and are not
guaranteed or endorsed by, any bank and are not federally insured or otherwise
protected by the Federal Deposit Insurance Corporation, the Federal Reserve
Board or any other agency and involve investment risk, including the possible
loss of the principal amount invested.
THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 12, which is
comprised of one unit investment trust, Swiss Blue Chip Strategic Trust, Series
1, was created under the laws of the State of New York pursuant to a Trust
Indenture and Trust Agreement (the "Trust Agreement"), dated as of the initial
date of deposit set forth in the "Summary of Essential Financial Information" in
Part One (the "Initial Date of Deposit"), among Van Kampen Funds Inc., as
Sponsor, Van Kampen Investment Advisory Corp., as Supervisor, The Bank of New
York, as Trustee, and American Portfolio Evaluation Services, a division of Van
Kampen Investment Advisory Corp., as Evaluator, or their predecessors.
The Trust offers investors the opportunity to purchase Units representing
proportionate interests in a portfolio of actively traded equity securities
listed on the Zurich, Basel or Geneva stock exchanges as of the Initial Date of
Deposit and issued by companies located in Switzerland.
Unless terminated earlier, the Trust will terminate on the Mandatory
Termination Date set forth under "Summary of Essential Financial Information" in
Part One 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.
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Securities 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 Units of the Trust.
Each Unit of the Trust initially offered represents an undivided interest in
the Trust. To the extent that any Units are redeemed by the Trustee, the
fractional undivided interest in the Trust represented by each unredeemed Unit
will increase accordingly, although the actual interest in the Trust represented
by such fraction will remain unchanged. Units will remain outstanding until
redeemed upon tender to the Trustee by Unitholders, which may include the
Sponsor or the Managing Underwriter, or until the termination of the Trust
Agreement.
OBJECTIVE AND SECURITIES SELECTION
The objective of the Trust 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 issued by companies located in
Switzerland and listed on the Zurich, Basel or Geneva stock exchanges as of the
Initial Date of Deposit. There is, of course, no assurance that the Trust (which
includes expenses and sales charges) will achieve its objective.
The Equity Securities selected for deposit in the Trust were chosen by
International Assets Advisory Corporation ("IAAC" or the "Managing
Underwriter"). In selecting the Equity Securities for inclusion in the Trust,
the Managing Underwriter considered the following criteria as of the Initial
Date of Deposit: (a) market capitalization for each issuer is in excess of $1
billion; (b) each Security is one of the 23 stocks included in the Swiss Market
Index (described by Bloomberg L.P. as "a capitalization-weighted index of the
largest and most liquid stocks traded on the Geneva, Zurich and Basel stock
exchanges"); (c) sales or turnover for each issuer is in excess of $5 billion;
and (d) each issuer is among the leaders within its industry. In selecting the
Equity Securities, the Managing Underwriter also considered the following
factors: (a) maintaining portfolio diversification; (b) selecting common stocks
which have a strong position within the international marketplace; and (c) the
possibility for above-average total return. In the Managing Underwriter's
opinion, an investment in the portfolio of Swiss Equity Securities will
accomplish the Trust's objectives.
Despite Switzerland's relatively small size and lack of natural resources,
many Swiss companies have enjoyed economic success. In fact, because of
Switzerland's relatively small domestic market, many Swiss companies (including
certain of those included in the portfolio) have become industry leaders in such
sectors as finance, pharmaceuticals, food manufacturing, and the chemical
industry. In addition, Switzerland's neutrality, its social, political and
economic strength, and the relative stability of the Swiss franc add to the
attractiveness of investing in Swiss companies.
Investors will be subject to taxation on the dividend income received by the
Trust and on gains from the sale or liquidation of Securities. Investors should
be aware that there is not any guarantee that the objective of the Trust will be
achieved because it is subject to the continuing ability of the respective
issuers to declare and pay dividends and because the market value of the
Securities can be affected by a variety of factors. Common stocks may be
especially susceptible to general stock market movements and to volatile
increases and decreases of value as market confidence in and perceptions of the
issuers change. Investors should be aware that there can be no assurance that
the value of the underlying Securities will increase or that the issuers of the
Securities will pay dividends on outstanding common shares. Any distribution of
income will generally depend upon the declaration of dividends by the issuers of
the Securities and the declaration of any dividends depends upon several factors
including the financial condition of the issuers and general economic
conditions. In addition, a decrease in the value of the Swiss franc relative to
the U.S. dollar will adversely affect the value of the Trust's assets and income
and the value of the Units of the Trust. See "Risk Factors."
Investors should note that the above criteria was applied to the Securities
for inclusion in the Trust as of the Initial Date of Deposit. Subsequent to the
Initial Date of Deposit, the Securities may no longer meet the above criteria.
Should a Security no longer meet the criteria originally established for
inclusion in the Trust, such Security will not as a result thereof be removed
from the Trust portfolio.
Investors should be aware that the Trust 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
"Trust 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. The Trust may continue to hold Securities
even though the evaluation of the attractiveness of the Securities may have
changed and, if the evaluation were performed again at that time, the Securities
would not be selected for the Trust.
TRUST PORTFOLIO
The Trust consists of common stocks of companies located in Switzerland
listed on the Zurich, Basel or Geneva stock exchanges as of the Initial Date of
Deposit.
Investors should note that the above criteria was applied to the Equity
Securities selected for inclusion in the Trust portfolio as of the date
indicated above. The Managing Underwriter may continue to sell Units of the
Trust even though the Equity Securities would no longer be chosen for deposit
into the Trust if the selection process were to be made again at a later time.
RISK FACTORS
General. An investment in Units of the Trust should be made with an
understanding of the risks which an investment in foreign common stocks entails,
including the risk that the financial condition of the issuers of the Equity
Securities or the general condition of the common stock market may worsen and
the value of the Equity Securities and therefore the value of the Units may
decline. Common stocks are especially susceptible to general stock market
movements and to volatile increases and decreases of value as market confidence
in and perceptions of the issuers change. These perceptions are based on
unpredictable factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
Shareholders of common stocks have rights to receive payments from the issuers
of those common stocks that are generally subordinate to those of creditors of,
or holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by the Trust have a right to
receive dividends only when and if, and in the amounts, declared by each
issuer's board of directors and have a right to participate in amounts available
for distribution by such issuer only after all other claims on such issuer have
been paid or provided for. Common stocks do not represent an obligation of the
issuer and, therefore, do not offer any assurance of income or provide the same
degree of protection of capital as do debt securities. The issuance of
additional debt securities or preferred stock will create prior claims for
payment of principal, interest and dividends which could adversely affect the
ability and inclination of the issuer to declare or pay dividends on its common
stock or the rights of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. The value of common stocks is subject to
market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Equity Securities in a portfolio may be expected to
fluctuate over the life of the 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 Trust may be restricted under the Investment Company Act of 1940
from selling Equity Securities to the Sponsor or the Managing Underwriter. The
price at which the Equity Securities may be sold to meet redemption, and the
value of the 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 the
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 the Trust and will vote such stocks in accordance with the
instructions of the Supervisor.
Foreign Securities. Since the Equity Securities consist of securities of
foreign issuers, an investment in the Trust involves certain investment risks
that are different in some respects from an investment in a 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 would contribute directly to a decrease
in the value of the Equity Securities and thus in the value of the Units), the
limited liquidity and relatively small market capitalization of the relevant
securities market, expropriation or confiscatory taxation, economic
uncertainties and foreign currency devaluations and fluctuations. In addition,
for foreign issuers that are not subject to the reporting requirements of the
Securities Exchange Act of 1934, there may be less publicly available
information than is available from a domestic issuer. Also, foreign issuers are
not necessarily subject to uniform accounting, auditing and financial reporting
standards, practices and requirements comparable to those applicable to domestic
issuers. The securities of many foreign issuers are less liquid and their prices
more volatile than securities of comparable domestic issuers. In addition, fixed
brokerage commissions and other transaction costs on foreign securities
exchanges are generally higher than in the United States and there is generally
less government supervision and regulation of exchanges, brokers and issuers in
foreign countries than there is in the United States. However, due to the nature
of the issuers of the Equity Securities, the Sponsor believes that adequate
information will be available to allow the Supervisor to provide portfolio
surveillance for the 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 are subject to exchange control restrictions
under existing law which would materially interfere with payment to the Trust 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 the 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
Trust and on the ability of the Trust to satisfy its 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 Trust relating to the purchase of
an Equity Security by reason of the federal securities laws or otherwise.
Foreign securities generally have not been registered under the Securities
Act of 1933 and may not be exempt from the registration requirements of such
Act. Sales of non-exempt Equity Securities by the Trust in the United States
securities markets are subject to severe restrictions and may not be
practicable. Accordingly, sales of these Equity Securities by the Trust will
generally be effected only in foreign securities markets. Although the Sponsor
does not believe that the 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.
Switzerland. The information provided below details certain important factors
which impact the economy of Switzerland. This information has been extracted
from various governmental and private publications, but no representation can be
made as to its accuracy; furthermore, no representation is made that any
correlation exists between the economy of Switzerland and the value of the
Equity Securities held by the Trust.
In the past, securities trading in Switzerland is concentrated on the Zurich,
Basel and Geneva Exchanges. In Switzerland, the cantons (federal states) are to
a certain extent entitled to enact laws regarding the securities brokerage
business, yet procedures are uniform throughout Switzerland. In addition, the
various exchanges are in differing respects self-regulated. However, following
implementation of a new national electronic stock exchange, the Swiss Stock
Exchange, the cantonal stock exchange laws were replaced by a new Federal Stock
Exchange Law. The nationwide electronic exchange began operating in 1995 and
connects all market trading and settlements in one computer-based network. The
new Federal Stock Exchange Law took effect in 1996. Currently, a security may
not be officially traded on an exchange without being admitted to the quotations
list under the listing regulations. A Swiss company whose securities are to be
listed must: (i) generally have been in business for at least five years, (ii)
have published its audited yearly accounts as well as its business report, (iii)
have a paid-in capital of not less than 5 million Swiss francs and (iv) the
total nominal amount of one specific issue is to be at least 10 million Swiss
francs or have a market value of at least 25 million Swiss francs. The new
Federal Stock Exchange Law covers all aspects of securities trading and focuses
on rules relating to disclosure and takeovers. The new law is also designed to
promote more far-reaching shareholder rights and satisfy needs of international
investors. Of course, the Sponsor cannot predict the extent to which the new law
will achieve its objectives or the effect, if any, the new system will have on
the Equity Securities in the Trust.
The Swiss securities markets have historically had substantially less volume
than the U.S. securities markets and the capitalization of the Swiss markets is
highly concentrated. This combination of lower volume and greater concentration
in the Swiss securities markets may create a risk of greater price volatility
than in the U.S. securities markets. While one of the goals of the new
electronic stock exchange system is to increase overall market liquidity, it is
not possible to predict the long-term effect that the introduction of the new
system will have on the Swiss securities market, in general, or the Equity
Securities in the Trust.
In late 1993, the European Union (the "EU"), formerly known as the European
Economic Community, was created through the Maastricht Treaty. It is expected
that the Treaty will have the effect of eliminating most remaining trade
barriers between the twelve member nations and make Europe one of the largest
common markets in the world. While Switzerland is not a member of the EU,
Switzerland and several other countries are members of the European Free Trade
Association (the "EFTA"). These countries signed an agreement with the EU in
1991 to establish a European Economic Area (the "EEA"). Broadly defined, the aim
of the agreement is to extend the same advantages of the single European market
to the EFTA countries. While it is not possible to predict the future influence
of the EEA treaty on the Swiss stock market, it is expected that the removal of
most barriers to the free movement of goods and labor in the EFTA countries will
positively impact Swiss multinational companies but also may have a negative
impact on non-multinational Swiss companies. Furthermore, the recent rapid
political and social change throughout Europe make the extent and nature of
future economic development in Switzerland and Europe, and the impact of such
development upon the value of the Equity Securities, impossible to predict.
Moreover, it is not possible to accurately predict the effect of the current
political and economic situation upon long-term inflation and balance of trade
cycles and how these changes would affect the currency exchange rate between the
U.S. dollar and the Swiss franc.
Exchange Rate. The Trust is comprised of Equity Securities that are
principally traded in Swiss francs and as such involves 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 the 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 Swiss franc. Most foreign
currencies have fluctuated widely in value against the United States dollar for
many reasons, including supply and demand of the respective currency, the rate
of inflation in the respective economies compared to the United States, the
impact of interest rate differentials between different currencies on the
movement of foreign currency rates, the balance of imports and exports of goods
and services, the soundness of the world economy and the strength of the
respective economy as compared to the economies of the United States and other
countries.
The post-World War II international monetary system was, until 1973,
dominated by the Bretton Woods Treaty, which established a system of fixed
exchange rates and the convertibility of the United States dollar into gold
through foreign central banks. Starting in 1971, growing volatility in the
foreign exchange markets caused the United States to abandon gold convertibility
and to effect a small devaluation of the United States dollar. In 1973, the
system of fixed exchange rates between a number of the most important industrial
countries of the world, among them the United States and most western European
countries, was completely abandoned. Subsequently, major industrialized
countries have adopted "floating" exchange rates, under which daily currency
valuations depend on supply and demand in a freely fluctuating international
market. Many smaller or developing countries have continued to "peg" their
currencies to the United States dollar although there has been some interest in
recent years in "pegging" currencies to "baskets" of other currencies or to a
Special Drawing Right administered by the International Monetary Fund. Since
January 1973, the Swiss franc has traded on a floating exchange rate basis
against all currencies. The Swiss franc is fully convertible and transferable
into all currencies without administrative or legal restrictions, both for
non-residents and residents of Switzerland. 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 Evaluator will estimate the current exchange rate for the Swiss franc
based on activity in the Swiss currency exchange market. However, since this
market may be volatile and is constantly changing, depending on the activity at
any particular time of the large international commercial banks, various central
banks, large multi-national corporations, speculators and other buyers and
sellers of foreign currencies, and since actual foreign currency transactions
may not be instantly reported, the exchange rates estimated by the Evaluator may
not be indicative of the amount in United States dollars the Trust would receive
had the Trustee sold any particular currency in the market. The foreign exchange
transactions of the 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).
Year 2000 Readiness Disclosure. These two paragraphs constitute "Year 2000
Readiness Disclosure" within the meaning of the Year 2000 Information and
Readiness Disclosure Act of 1998. If computer systems used by the Sponsor,
Evaluator, Supervisor, Trustee or other service providers to the Trust do not
properly process date-related information after December 31, 1999, the resulting
difficulties could adversely impact the Trust. This is commonly known as the
"Year 2000 Problem". The Sponsor, Evaluator, Supervisor and Trustee are taking
steps to address this problem and to obtain reasonable assurances that other
service providers to the Trust are taking comparable steps. We cannot guarantee
that these steps will be sufficient to avoid any adverse impact on the Trust.
This problem may impact corporations to varying degrees based on factors such as
industry sector and degree of technological sophistication. We cannot predict
what impact, if any, this problem will have on the issuers of the Securities.
In addition, computer failures throughout the financial services industry
beginning January 1, 2000 could have a detrimental affect on the markets for the
Securities. Improperly functioning trading systems may result in settlement
problems and liquidity issues. Moreover, corporate and governmental data
processing errors may adversely affect issuers and overall economic
uncertainties. Remediation costs will affect the earnings of individual issuers.
These costs could be substantial. Issuers may report these costs inconsistently
in U.S. and foreign financial markets. All of these issues could adversely
affect the Securities and the Trust.
TAXATION
The following is a general discussion of certain of the federal income tax
consequences of the purchase, ownership and disposition of the Units of the
Trust. The summary is limited to investors who hold the Units as "capital
assets" (generally, property held for investment within the meaning of Section
1221 of the Internal Revenue Code of 1986 (the "Code")). Unitholders should
consult their tax advisers in determining the federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units in
the Trust. For purposes of the following discussion and opinion, it is assumed
that each Security is equity for federal income tax purposes.
In the opinion of Chapman and Cutler, special counsel for the Sponsor, under
existing law:
1. The Trust is not an association taxable as a corporation for federal
income tax purposes; each Unitholder will be treated as the owner of a pro rata
portion of each of the assets of the Trust under the Code; and the income of the
Trust will be treated as income of the Unitholders thereof under the Code. Each
Unitholder will be considered to have received his pro rata share of income
derived from the Trust asset when such income is considered to be received by
the Trust.
2. A Unitholder will be considered to have received all of the dividends paid
on his pro rata portion of each Security when such dividends are considered to
be received by the Trust. Unitholders will be taxed in this manner regardless of
whether distributions from the Trust are actually received by the Unitholder or
are automati cally reinvested.
3. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, liquidation, redemption, or otherwise) or
upon the sale or redemption of Units by such Unitholder (except to the extent an
in kind distribution of stock is received by such Unitholder as described
below). The price a Unitholder pays for his Units, generally including sales
charges, is allocated among his pro rata portion of each Security held by the
Trust (in proportion to the fair market values thereof on the valuation date
nearest the date the Unitholder purchase his Units) in order to determine his
initial tax basis for his pro rata portion of each Security held by the Trust.
Unitholders should consult their own tax advisers with regard to calculation of
basis. For federal income tax purposes, a Unitholder's pro rata portion of
dividends as defined by Section 316 of the Code paid by a corporation with
respect to a Security held by the 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 exceeds
such current and accumulated earnings and profits will first reduce a
Unitholder's tax basis in such Security, and to the extent that such dividends
exceed a Unitholder's tax basis in such Security shall generally be treated as
capital gain. In general, the holding period for such capital gain will be
determined by the period of time a Unitholder has held his Units.
4. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital gain, except in the case of a dealer or a financial
institution. A Unitholder's portion of loss, if any, upon the sale or redemption
of Units or the disposition of Securities held by the Trust will generally be
considered a capital loss (except in the case of a dealer or a financial
institution).
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such Unitholder's
pro rata portion of dividends received by the Trust (to the extent such
dividends are taxable as ordinary income, as discussed above, and are
attributable to domestic corporations) in the same manner as if such corporation
directly owned the Securities paying such dividends (other than corporate
Unitholders, such as "S" corporations, which are not eligible for the deduction
because of their special characteristics and other than for purposes of special
taxes such as the accumulated earnings tax and the personal holding corporation
tax). However, a corporation owning Units should be aware that Sections 246 and
246A of the Code impose additional limitations on the eligibility of dividends
for the 70% dividends received deduction. These limitations include a
requirement that stock (and therefore Units) must generally be held at least 46
days (as determined under Section 246(c) of the Code). Final regulations have
been issued which address special rules that must be considered in determining
whether the 46 day holding 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.
To the extent dividends received by the Trust are attributable to foreign
corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends, since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations. Unitholders should
consult with their tax advisers with respect to the limitations on and possible
modifications to the dividends received deduction.
Limitations on Deductibility of Trust Expenses by Unitholders. Each
Unitholder's pro rata share of each expense paid by the Trust is deductible by
the Unitholder to the same extent as though the expense had been paid directly
by him. It should be noted that as a result of the Tax Reform Act of 1986,
certain miscellaneous itemized deductions, such as investment expenses, tax
return preparation fees and employee business expenses will be deductible by an
individual only to the extent they exceed 2% of such individual's adjusted gross
income. Unitholders may be required to treat some or all of the expenses of the
Trust as miscellaneous itemized deductions subject to this limitation.
Recognition of Taxable Gain or Loss Upon Disposition of Securities by the
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. The Internal Revenue Service Restructing and
Reform Act of 1998 (the "1998 Tax Act") provides that for taxpayers other than
corporations, net capital gain (which is defined as net long-term capital gain
over net short-term capital loss for the taxable year) realized from property
(with certain exclusions) is subject to a maximum marginal stated tax rate of
20% (10% in the case of certain taxpayers in the lowest tax bracket). Capital
gain or loss is long-term if the holding period for the asset is more than one
year, and is short-term if the holding period for the asset is one year or less.
The date on which a Unit is acquired (i.e., the "trade date") is excluded for
purposed for determining the holding period of the Unit. Capital gains realized
from assets held for one year or less are taxed at the same rates as ordinary
income.
In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Unitholders and prospective investors should consult with
their tax advisers regarding the potential effect of this provision on their
investment in Units.
If a Unitholder disposes of a Unit he is deemed thereby to have disposed of
his entire pro rata interest in all assets of the Trust including his pro rata
portion of all Securities represented by a Unit.
The Taxpayer Relief Act of 1997 (the "1997 Act") includes provisions that
treat certain transactions designed to reduce or eliminate risk of loss and
opportunities for gain (e.g., short sales, offsetting notional principal
contracts, futures or forward contracts or similar transactions) as constructive
sales for purposes of recognition of gain (but not of loss) and for purposes of
determining the holding period. Unitholders should consult their own tax
advisers with regard to any such constructive sales rules.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the Trust. As discussed in "Rights of Unitholders--Redemption of
Units", under certain circumstances a Unitholder tendering Units for redemption
may request an in kind distribution. A Unitholder may also under certain
circumstances request an in kind distribution upon the termination of the Trust.
See "Rights of Unitholders--Redemption of Units." As previously discussed, prior
to the redemption of Units or the termination of the Trust, a Unitholder is
considered as owning a pro rata portion of each of the Trust's assets for
federal income tax purposes. The receipt of an in kind distribution will result
in a Unitholder receiving an undivided interest in whole shares of stock plus,
possibly, cash.
The potential tax consequences that may occur under an in kind distribution
with respect to each Security held by the Trust will depend on whether or not a
Unitholder receives cash in addition to Securities. A "Security" for this
purpose is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only receives
Securities in exchange for his or her pro rata portion of the Securities held by
the Trust. However, if a Unitholder also receives cash in exchange for a
fractional share of Security held by the Trust, such Unitholder will generally
recognize gain or loss based upon the difference between the amount of cash
received by the Unitholder and his tax basis in such fractional share of a
Security held by the Trust.
Because the Trust will own many Securities, a Unitholder who requests an in
kind distribution will have to analyze the tax consequences with respect to each
Security owned by the Trust. 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 the Trust. Unitholders who request an in kind distribution are advised
to consult their tax advisers in this regard.
Computation of the Unitholder's Tax Basis. Initially, a Unitholder's tax
basis in his Units will generally equal the price paid by such Unitholder of his
Units. The cost of the Units is allocated among the Securities held in the Trust
in accordance with the proportion of the fair market values of such Securities
on the valuation date nearest the date the Units are purchased in order to
determine such Unitholder's tax basis for his pro rata portion of each Security.
A Unitholder's tax basis in his Units and his pro rata portion of a Security
held by the Trust will be reduced to the extent dividends paid with respect to
such Security are received by the Trust which are not taxable as ordinary income
as described above.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the Unitholder
has not been notified that payments to the Unitholder are subject to back-up
withholding. If the proper taxpayer identification number and appropriate
certification are not provided when requested, distributions by the Trust to
such Unitholder (including amounts received upon the redemption of Units) will
be subject to back-up withholding. Distributions by the Trust (other than those
that are not treated as United States source income, if any) will generally be
subject to United States income taxation and withholding in the case of Units
held by non-resident alien individuals, foreign corporations or other non-United
States persons. Such persons should consult their tax advisers.
In general, income that is not effectively connected to the conduct of a
trade or business within the United States that is earned by non-U.S.
Unitholders and derived from dividends of foreign corporations will not be
subject to U.S. withholding tax provided that less than 25 percent of the gross
income of the foreign corporations for a three-year period ending with the close
of its taxable year preceding payment was effectively connected to the conduct
of a trade or business within the United States. In addition, such earnings may
be exempt from U.S. withholding pursuant to a specific treaty between the United
States and a foreign country. Non-U.S. Unitholders should consult their own tax
advisers regarding the imposition of U.S. withholding on distributions from the
Trust.
It should be noted that payments to the Trust of dividends on Securities that
are attributable to foreign corporations may be subject to foreign withholding
taxes and Unitholders should consult their tax advisers regarding the potential
tax consequences relating to the payment of any such withholding taxes by the
Trust. Any dividends withheld as a result thereof will nevertheless be treated
as income to the Unitholders. Because, under the grantor trust rules, an
investor is deemed to have paid directly his share of foreign taxes that have
been paid or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect to such taxes.
The 1997 Act imposes a required holding period for such credits.
Investors should consult their tax advisers with respect to foreign withholding
taxes and foreign tax credits.
At the termination of the Trust, the Trustee will furnish to each Unitholder
of the Trust a statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security (resulting from redemption or the
sale of any Security), and the fees and expenses paid by the Trust. The Trustee
will also furnish annual information returns to Unitholders and to the Internal
Revenue Service.
In the opinion of special counsel to the Trust for New York tax matters, the
Trust is not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unitholders under the existing income tax
laws of the State and City of New York.
The foregoing discussion relates only to the tax treatment of U.S.
Unitholders ("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
of the Trust that (a) is (i) for United States federal income tax purposes a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source or (b) does not qualify as a U.S. Unitholder in paragraph (a) but whose
income from a Unit is effectively connected with such Unitholder's conduct of a
United States trade or business. The term also includes certain former citizens
of the United States whose income and gain on the Units will be taxable.
Unitholders should consult their tax advisers regarding potential foreign, state
or local taxation with respect to the Units.
TRUST OPERATING EXPENSES
Initial Costs. All costs and expenses incurred in creating and establishing
the Trust, 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 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 Trust. However, Van Kampen
Investment Advisory Corp., which is an affiliate of the Sponsor, will receive an
annual supervisory fee, payable in monthly installments, which is not to exceed
the amount set forth under "Summary of Essential Financial Information" in Part
One, for providing portfolio supervisory services for the Trust. Such fee (which
is based on the number of Units outstanding on January 1 of each year for which
such compensation relates) may exceed the actual costs of providing such
supervisory services for this Trust, but at no time will the total amount
received for portfolio supervisory services rendered to all 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. Pursuant to a contract with
the Supervisor, Global Assets Advisors, Inc., a non-affiliated firm regularly
engaged in the business of evaluating, quoting or appraising comparable
securities, provides, for both the initial offering period and secondary market
transactions, portfolio supervisory services for the Trust and receives for such
services the entire supervisory fee paid to the Supervisor. In addition,
American Portfolio Evaluation Services, which is a division of Van Kampen
Investment Advisory Corp., shall receive for regularly providing evaluation
services to the Trust the annual per Unit evaluation fee, payable in monthly
installments, set forth under "Summary of Essential Financial Information" in
Part One (which is based on the number of Units of the Trust outstanding on
January 1 of each year for which such compensation relates) for regularly
evaluating the Trust portfolio. Both of the foregoing fees may be increased
without approval of the Unitholders by amounts not exceeding proportionate
increases under the category "All Services Less Rent of Shelter" in the Consumer
Price Index published by the United States Department of Labor or, if such
category is no longer published, in a comparable category. The Sponsor and the
Managing Underwriter will receive sales commissions and the Managing Underwriter
may realize other profits (or losses) in connection with the sale of Units as
described under "Public Offering--Sponsor and Managing Underwriter
Compensation".
Trustee's Fee. For its services the Trustee will receive the annual per Unit
fee from the Trust set forth under "Summary of Essential Financial Information"
in Part One (which is based on the number of Units of the Trust outstanding on
January 1 of each year for which such compensation relates) and the additional
amounts set forth in the footnotes in the "Summary of Essential Financial
Information" in Part One. The Trustee's fees are payable in monthly installments
on or before the twenty-fifth day of each month from the Income Account of the
Trust to the extent funds are available and then from the Capital Account of the
Trust. The Trustee benefits to the extent there are funds for future
distributions, payment of expenses and redemptions in the Capital and Income
Accounts since these Accounts are non-interest bearing and the amounts earned by
the Trustee are retained by the Trustee. Part of the Trustee's compensation for
its services to the Trust is expected to result from the use of these funds.
Such fees may be increased without approval of the Unitholders by amounts not
exceeding proportionate increases under the category "All Services Less Rent of
Shelter" in the Consumer Price Index published by the United States Department
of Labor or, if such category is no longer published, in a comparable category.
For a discussion of the services rendered by the Trustee pursuant to its
obligations under the Trust Agreement, see "Rights of Unitholders--Reports
Provided" and "Trust Administration."
Miscellaneous Expenses. The following additional charges are or may be
incurred by the Trust: (a) normal expenses (including the cost of mailing
reports to Unitholders) incurred in connection with the operation of 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 the Trust and the rights and interests of
Unitholders, (f) indemnification of the Trustee for any loss, liability or
expenses incurred in the administration of the Trust without negligence, bad
faith or wilful misconduct on its part, (g) foreign custodial and transaction
fees, (h) accrual of costs associated with liquidating the Securities and (i)
expenditures incurred in contacting Unitholders upon termination of the Trust.
The Trust may pay the cost of updating its registration statement each year.
Unit investment trust sponsors have historically paid these costs. The fees and
expenses set forth herein are payable out of the Trust. When such fees and
expenses are paid by or owing to the Trustee, they are secured by a lien on the
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 the Trust. If the balances in the Income and Capital Accounts are
insufficient to provide for amounts payable by the Trust, the Trustee has the
power to sell 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. The secondary market
Public Offering Price is based on the aggregate underlying value of the
Securities in the Trust, an applicable sales charge (which will be reduced
annually by .5 of 1% to a minimum sales charge of 3.5%), and cash, if any, in
the Income and Capital Accounts held or owned by the Trust. Such underlying
value is based on the aggregate value of the Securities computed on the basis of
the currency exchange rate for the Swiss franc expressed in U.S. dollars as of
the Evaluation Time.
The sales charge applicable to quantity purchases is reduced on a graduated
basis to any person acquiring 10,000 or more Units as follows:
Aggregate Number
of Units Purchased Sales Charge Reduction Per Unit
---------------------------------- -----------------------------
10,000 - 24,000 0.60%
25,000 - 49,999 0.90%
50,000 - 99,999 1.30%
100,000 or more 2.10%
Any sales charge reduction will primarily be the responsibility of the
selling Managing Underwriter, broker, dealer or agent. Registered
representatives of the Managing Underwriter may purchase Units of the Trust at
the current Public Offering Price less the dealer's concession for secondary
market transactions. Registered representatives of selling brokers, dealers, or
agents may purchase Units of the Trust at the current Public Offering Price less
the dealer's concession.
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in Part One in
accordance with fluctuations in the prices of the underlying Securities in the
Trusts. The Public Offering Price per Unit is based on the aggregate value of
the Securities computed on the basis of the currency exchange rate for the Swiss
franc expressed in U.S. dollars during the secondary market.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Securities in the Trust
an amount initially equal to 5.820% of such value and dividing the sum so
obtained by the number of Units in the Trust outstanding. The Public Offering
Price shall include the proportionate share of any cash held in the Income and
Capital Accounts in the Trust. This computation produced a gross underwriting
profit initially equal to 5.5% of the Public Offering Price. Such price
determination as of the close of the relevant stock market on the date set forth
under "Summary of Essential Financial Information" in Part One was made on the
basis of an evaluation of the Securities in the Trust prepared by Interactive
Data Corporation, a firm regularly engaged in the business of evaluating,
quoting or appraising comparable securities. Thereafter, the Evaluator on each
business day will appraise or cause to be appraised the value of the underlying
Securities in the Trust as of the 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 Managing Underwriter
for purchases, sales or redemptions after that time, or on a day which is not a
business day for the 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, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas Day. In addition "business day" shall exclude the
following Swiss holidays: Easter Monday, Ascension Day, Whit Monday and Boxing
Day.
The value of the Equity Securities is determined on each business day by the
Evaluator as described under "Rights of Unitholders--Redemption of Units".
In offering the Units to the public, neither the Sponsor, the Managing
Underwriter nor any broker-dealers are recommending any of the individual
Securities in the Trust but rather the entire pool of Securities, taken as a
whole, which are represented by the Units.
Unit Distribution. Units will be distributed to the public by the Managing
Underwriter, 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.
It is the intention of the Sponsor to qualify Units of the Trust for sale in
a number of states. For secondary market transactions, the broker-dealer
concession or agency commission will amount to 65% of the then current maximum
sales charge. However, resale of Units of the Trust by such Managing
Underwriter, dealers and others to the public will be made at the Public
Offering Price described in the prospectus. Effective on each May 23, commencing
May 23, 1996, the sales charge will be reduced by .5 of 1% to a minimum of 3.5%.
Certain commercial banks are making Units of the Trust available to their
customers on an agency basis. A portion of the sales charge (equal to the agency
commission referred to above) is retained by or remitted to the banks. Under the
Glass-Steagall Act, banks are prohibited from underwriting Trust Units; however,
the Glass-Steagall Act does permit certain agency transactions and the banking
regulators have not indicated that these particular agency transactions are not
permitted under such Act. 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 Managing Underwriter reserves the right to
reject, in whole or in part, any order for the purchase of Units and to change
the amount of the concession or agency commission to dealers and others from
time to time.
Sponsor and Managing Underwriter Compensation. The Managing Underwriter will
receive the gross sales commission initially equal to 5.5% of the Public
Offering Price of the Units, less any reduced sales charge described under
"General" above. Any discount provided to investors will be borne by the selling
dealer or agent.
In addition, the Managing Underwriter has realized a profit or sustained a
loss, as the case may be, as a result of the difference between the price paid
for the Securities by the Managing Underwriter and the cost of such Securities
to the Trust on the Initial Date of Deposit as well as on subsequent deposits.
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 portfolio. The Managing Underwriter 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 Trust 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 Managing Underwriter.
A person will become the owner of Units on the date of settlement provided
payment has been received. Cash, if any, made available to the Sponsor or
Managing Underwriter prior to the date of settlement for the purchase of Units
may be used in the Sponsor's or the Managing Underwriter's business and may be
deemed to be a benefit to the Sponsor or Managing Underwriter, subject to the
limitations of the Securities Exchange Act of 1934.
As stated under "Public Market" below, the Managing Underwriter currently
intends to maintain a secondary market for Units of the Trust. In so maintaining
a market, the Managing Underwriter 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 Managing Underwriter or Sponsor will also
realize profits or sustain losses resulting from a redemption of such
repurchased Units at a price above or below the purchase price for such Units,
respectively.
Public Market. Although it is not obligated to do so, the Managing
Underwriter currently intends to maintain a market for the Units offered hereby
and offer continuously to purchase Units at prices, subject to change at any
time, based upon the aggregate underlying value of the Equity Securities in the
Trust (computed as indicated under "Rights of Unitholders--Redemption of
Units"). The aggregate underlying value of the Equity Securities is computed on
the basis of the bid side value of the currency exchange rate for the Swiss
franc expressed in U.S. dollars. If the supply of Units exceeds demand or if
some other business reason warrants it, the Managing Underwriter 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 Trust 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 Trust may be limited by the plans' provisions and does not
itself establish such plans. The minimum purchase in connection with a
tax-sheltered retirement plan is 100 Units.
RIGHTS OF UNITHOLDERS
Certificates. The Trustee is authorized to treat as the record owner of Units
that person who is registered as such owner on the books of the Trustee.
Ownership of Units of the Trust will be evidenced by book entry unless a
Unitholder or the Unitholder's registered broker-dealer makes a written request
to the Trustee that ownership be evidenced by certificates. 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 the Trust with
respect to the Equity Securities therein are credited by the Trustee to the
Income Account of the Trust. Other receipts (e.g., capital gains, proceeds from
the sale of Securities, etc.) are credited to the Capital Account of the Trust.
Dividends to be credited to such accounts are first converted into U.S. dollars
at the applicable exchange rate for the Swiss franc.
The Trustee will distribute any net income received with respect to any of
the Securities in the Trust on or about the Income Distribution Dates to
Unitholders of record on the preceding Income Record Dates. See "Summary of
Essential Financial Information"in Part One. Proceeds received on the sale of
any Securities in the Trust, to the extent not used to meet redemptions of Units
or pay expenses, will be distributed annually on the Capital Account
Distribution Date to Unitholders of record on the preceding Capital Account
Record Date. 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 Trust and not distributed until the next distribution
date applicable to the 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 the 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.
On or before the twenty-fifth 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 Trust amounts necessary to pay the expenses of the Trust
(as determined on the basis set forth under "Trust Operating Expenses"). The
Trustee also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of the
Trust. Amounts so withdrawn shall not be considered a part of the Trust's assets
until such time as the Trustee shall return all or any part of such amounts to
the appropriate accounts. In addition, the Trustee may withdraw from the Income
and Capital Accounts of the Trust such amounts as may be necessary to cover
redemptions of Units.
Reports Provided. The Trustee shall furnish Unitholders of the 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 the 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
the Trust a statement (i) as to the Income Account: income received, deductions
for applicable taxes and for fees and expenses of the Trust, for redemptions of
Units, if any, and the balance remaining after such distributions and
deductions, expressed in each case both as a total dollar amount and as a dollar
amount representing the pro rata share of each Unit outstanding on the last
business day of such calendar year; (ii) as to the Capital Account: the dates of
disposition of any Securities and the net proceeds received therefrom,
deductions for payment of applicable taxes, fees and expenses of the Trust held
for distribution to Unitholders of record as of a date prior to the
determination and the balance remaining after such distributions and deductions
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each Unit outstanding on the last business day of such
calendar year; (iii) a list of the Securities held by such Trust and the number
of Units of the Trust outstanding on the last business day of such calendar
year; (iv) the Redemption Price per Unit of the 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
the 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 the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his Units by
tender to the Trustee at its unit investment trust division 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 third business day following such tender the Unitholder will receive in cash
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 converted into U.S.
dollars as of the Evaluation Time set forth under "Summary of Essential
Financial Information" in Part One. 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. Swiss stock exchanges
are open for trading on certain days which are U.S. holidays on which the Trust
will not transact business. The Securities will continue to trade on those days
and thus the value of the Trust may be significantly affected on days when a
Unitholder cannot sell or redeem his Units.
The Trustee is empowered to sell Securities of the Trust in order to make
funds available for redemption if funds are not otherwise available in the
Capital and Income Accounts of the Trust to meet redemptions. The Securities to
be sold will be selected by the Trustee from those designated on a current list
provided by the Supervisor for this purpose. Units so redeemed shall be
cancelled.
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 the Trust, plus or minus cash, if any, in the
Income and Capital Accounts of the Trust (net of applicable commissions and
stamp taxes). The Redemption Price per Unit is the pro rata share of each Unit
in the Trust determined on the basis of (i) the cash on hand in the Trust, (ii)
the value of the Securities in the Trust and (iii) dividends receivable on the
Equity Securities of the Trust trading ex-dividend as of the date of
computation, less (a) amounts representing taxes or other governmental charges
payable out of the Trust and (b) the accrued expenses of the Trust. The
Evaluator may determine the value of the Equity Securities in the Trust in the
following manner: if the Equity Securities are listed on a national securities
exchange, this evaluation is generally based on the closing sale prices on that
exchange (unless it is determined that these prices are inappropriate as a basis
for valuation) or, if there is no closing sale price on that exchange, at the
closing bid prices. If the Equity Securities 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. 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 currency exchange rate for the Swiss franc 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 the Trust is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit.
TRUST ADMINISTRATION
Managing Underwriter Purchases of Units. The Trustee shall notify the
Managing Underwriter of any Units tendered for redemption. If the Managing
Underwriter'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 Managing
Underwriter may be tendered to the Trustee for redemption as any other Units.
The offering price of any Units acquired by the Managing Underwriter 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 Managing Underwriter which likewise will bear
any loss resulting from a lower offering or redemption price subsequent to its
acquisition of such Units.
Portfolio Administration. The portfolio of the Trust is 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.
While the Trust will not be managed, the Trust Agreement, however, does provide
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
the 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 the Trust, they may be accepted for deposit
in the Trust and either sold by the Trustee or held in the 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 Trust in exchange for Equity Securities) are credited to the
Capital Account for distribution to Unitholders or to meet redemptions. Except
as stated under "Trust Portfolio" and as provided in this paragraph, the
acquisition by the 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 the Trust tendered for redemption and the payment of expenses.
When the Trust sells Securities, the composition and diversity of the Equity
Securities in the Trust may be altered. In order to obtain the best price for
the Trust, it may be necessary for the Supervisor to specify minimum amounts
(generally 100 shares) in which blocks of Equity Securities are to be sold.
Amendment or Termination. The Trust Agreement may be amended by the Trustee
and the Sponsor without the consent of any of the Unitholders (1) to cure any
ambiguity or to correct or supplement any provision thereof which may be
defective or inconsistent, or (2) to make such other provisions as shall not
adversely affect the Unitholders (as determined in good faith by the Sponsor and
the Trustee), provided, however, that the Trust Agreement may not be amended to
increase the number of Units (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 the Trust then outstanding, provided that no
such amendment or waiver will reduce the interest in the Trust of any Unitholder
without the consent of such Unitholder or reduce the percentage of Units
required to consent to any such amendment or waiver without the consent of all
Unitholders. The Trustee shall advise the Unitholders of any amendment promptly
after execution thereof.
The Trust may be liquidated at any time by consent of Unitholders
representing 66 2/3% of the Units of the Trust then outstanding or by the
Trustee when the value of the Equity Securities owned by a Trust, as shown by
any evaluation, is less than that amount set forth under Minimum Termination
Value in the "Summary of Essential Financial Information" in Part One. The Trust
Agreement will terminate upon the sale or other disposition of the last Security
held thereunder, but in no event will it continue beyond the Mandatory
Termination Date stated under "Summary of Essential Financial Information" in
Part One.
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trust. 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 Trust.
Unitholders will receive a cash distribution from the sale of the remaining
Securities within a reasonable time following the Mandatory Termination Date.
The Trustee will deduct from the funds of the Trust any accrued costs, expenses,
advances or indemnities provided by the Trust Agreement, including estimated
compensation of the Trustee, costs of liquidation and any amounts required as a
reserve to provide for payment of any applicable taxes or other governmental
charges. Any sale of Securities in the Trust upon termination may result in a
lower amount than might otherwise be realized if such sale were not required at
such time. The Trustee will then distribute to each Unitholder of the Trust his
pro rata share of the balance of the Income and Capital Accounts of the Trust.
Within 60 days after the final distribution Unitholders will be furnished a
final distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in the
same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and
the Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence (negligence in the case of
the Trustee) in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder.
The Trustee shall not be liable for depreciation or loss incurred by reason
of the sale by the Trustee of any of the Securities. In the event of the failure
of the Sponsor to act under the Trust Agreement, the Trustee may act thereunder
and shall not be liable for any action taken by it in good faith under the Trust
Agreement. The Trustee shall not be liable for any taxes or other governmental
charges imposed upon or in respect of the Securities or upon the interest
thereon or upon it as Trustee under the Trust Agreement or upon or in respect of
the Trust which the Trustee may be required to pay under any present or future
law of the United States of America or of any other taxing authority having
jurisdiction. In addition, the Trust Agreement contains other customary
provisions limiting the liability of the Trustee.
The Trustee, Sponsor, Supervisor and Unitholders may rely on any evaluation
furnished by the Evaluator and shall have no responsibility for the accuracy
thereof. Determinations by the Evaluator under the Trust Agreement shall be made
in good faith upon the basis of the best information available to it, provided,
however, that the Evaluator shall be under no liability to the Trustee, Sponsor
or Unitholders for errors in judgment. This provision shall not protect the
Evaluator in any case of willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
Managing Underwriter and Sub-Supervisor. International Assets Advisory
Corporation ("IAAC"), the Managing Underwriter for the Trust, is a full-service
securities brokerage firm specializing in global investing. IAAC was formed as a
Florida corporation in 1981 and registered as a broker/dealer in 1982. The firm
has focused on the sale of global debt and equity securities to its clients.
IAAC has developed an experienced team specializing in the selection, research,
trading, currency exchange and execution of individual equity and fixed-income
products on a global basis. Members of this team are also affiliated with Global
Assets Advisors, Inc. and have many years of experience in the global
marketplace. Global Assets Advisors, Inc., is the Sub-Supervisor and provides
research and portfolio supervisory services for the Trust pursuant to a contract
with the Supervisor. Global Assets Advisors is a wholly-owned subsidiary of
International Assets Holding Corporation and a related corporation of IAAC. The
principal offices of IAAC and Global Assets Advisors are located at 250 Park
Avenue South, Suite 200, Winter Park, Florida 32789. The telephone number is
(800) 432-0000.
Sponsor. Van Kampen Funds Inc., a Delaware corporation, is the Sponsor of the
Trust. The Sponsor is an indirect subsidiary of Van Kampen Investments Inc. Van
Kampen Investments Inc. is a wholly owned subsidiary of MSAM Holdings II, Inc.,
which in turn is a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.
("MSDW").
MSDW, together with various of its directly and indirectly owned
subsidiaries, is engaged in a wide range of financial services through three
primary businesses: securities, asset management and credit services. These
principal businesses include securities underwriting, distribution and trading;
merger, acquisition, restructuring and other corporate finance advisory
activities; merchant banking; stock brokerage and research services; asset
management; trading of futures, options, foreign exchange commodities and swaps
(involving foreign exchange, commodities, indices and interest rates); real
estate advice, financing and investing; global custody, securities clearance
services and securities lending; and credit card services.
Van Kampen Funds Inc. specializes in the underwriting and distribution of
unit investment trusts and mutual funds with roots in money management dating
back to 1926. The Sponsor is a member of the National Association of Securities
Dealers, Inc. and has offices at One Parkview Plaza, Oakbrook Terrace, Illinois
60181, (630) 684-6000 and 2800 Post Oak Boulevard, Houston, Texas 77056, (713)
993-0500. As of November 30, 1998, the total stockholders' equity of Van Kampen
Funds Inc. was $135,236,000 (audited). (This paragraph relates only to the
Sponsor and not to the Trust or to any other Series thereof. The information is
included herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
As of September 30, 1997, the Sponsor and its Van Kampen affiliates managed
or supervised approximately $65.3 billion of investment products, of which over
$10.85 billion is invested in municipal securities. The Sponsor and its Van
Kampen affiliates managed $54 billion of assets, consisting of $34.3 billion for
55 open-end mutual funds (of which 45 are distributed by Van Kampen Funds Inc.)
$14.2 billion for 37 closed-end funds and $5.5 billion for 106 institutional
accounts. The Sponsor has also deposited approximately $26 billion of unit
investment trusts. All of Van Kampen's open-end funds, closed-ended funds and
unit investment trusts are professionally distributed by leading financial firms
nationwide. Based on cumulative assets deposited, the Sponsor believes that it
is the largest sponsor of insured municipal unit investment trusts, primarily
through the success of its Insured Municipals Income Trust(R) or the IM-IT(R)
trust. The Sponsor also provides surveillance and evaluation services at cost
for approximately $13 billion of unit investment trust assets outstanding. Since
1976, the Sponsor has serviced over two million investor accounts, opened
through retail distribution firms.
If the Sponsor shall fail to perform any of its duties under the Trust
Agreement or become incapable of acting or shall become bankrupt or its affairs
are taken over by public authorities, then the Trustee may (i) appoint a
successor Sponsor at rates of compensation deemed by the Trustee to be
reasonable and not exceeding amounts prescribed by the Securities and Exchange
Commission, (ii) terminate the Trust Agreement and liquidate the Trusts as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
All costs and expenses incurred in creating and establishing the Series 1,
including the cost of the initial preparation, printing and execution of the
Trust Agreement and the certificates, legal and accounting expenses, advertising
and selling expenses, expenses of the Trustee, initial evaluation fees and other
out-of-pocket expenses have been borne by the Sponsor at no cost to such Trust.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its unit investment trust
division offices at 101 Barclay Street, New York, New York 10286 (800) 221-7668.
The Bank of New York is subject to supervision and examination by the
Superintendent of Banks of the State of New York and the Board of Governors of
the Federal Reserve System, and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Securities for the Trust portfolio.
In accordance with the Trust Agreement, the Trustee shall keep proper books
of record and account of all transactions at its office for the Trust. Such
records shall include the name and address of, and the number of Units of the
Trust held by, every Unitholder of the Trust. Such books and records shall be
open to inspection by any Unitholder at all reasonable times during the usual
business hours. The Trustee shall make such annual or other reports as may from
time to time be required under any applicable state or federal statute, rule or
regulation (see "Rights of Unitholders--Reports Provided"). The Trustee is
required to keep a certified copy or duplicate original of the Trust Agreement
on file in its office available for inspection at all reasonable times during
the usual business hours by any Unitholder, together with a current list of the
Securities held in the Trust.
Under the Trust Agreement, the Trustee or any successor trustee may resign
and be discharged of its responsibilities created by the Trust Agreement by
executing an instrument in writing and filing the same with the Sponsor. The
Trustee or successor trustee must mail a copy of the notice of resignation to
all Unitholders then of record, not less than 60 days before the date specified
in such notice when such resignation is to take effect. The Sponsor upon
receiving notice of such resignation is obligated to appoint a successor trustee
promptly. If, upon such resignation, no successor trustee has been appointed and
has accepted the appointment within 30 days after notification, the retiring
Trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The Sponsor may remove the Trustee and appoint a successor trustee as
provided in the Trust Agreement at any time with or without cause. Notice of
such removal and appointment shall be mailed to each Unitholder by the Sponsor.
Upon execution of a written acceptance of such appointment by such successor
trustee, all the rights, powers, duties and obligations of the original trustee
shall vest in the successor. The resignation or removal of a Trustee becomes
effective only when the successor trustee accepts its appointment as such or
when a court of competent jurisdiction appoints a successor trustee.
Any corporation into which a Trustee may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which a Trustee shall be a party, shall be the successor trustee. The Trustee
must be a banking corporation organized under the laws of the United States or
any state and having at all times an aggregate capital, surplus and undivided
profits of not less than $5,000,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby has been passed upon
by Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois 60603, as
counsel for the Sponsor.
Independent Certified Public Accountants. The statement of condition and the
related securities portfolio included in this Prospectus have been audited by
Grant Thornton LLP, independent certified public accountants, as set forth in
their report in this Prospectus, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing.
CONTENTS OF POST-EFFECTIVE AMENDMENT TO REGISTRATION STATEMENT
This Post-Effective Amendment to the Registration Statement comprises the
following papers and documents:
The facing sheet
The prospectus
The signatures
The Consent of Independent Accountants
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Van Kampen American Capital Equity Opportunity Trust, Series 12, certifies that
it meets all of the requirements for effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment to its Registration Statement to be signed
on its behalf by the undersigned thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Chicago and State of Illinois
on the 26th day of April, 1999.
VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 12
(Registrant)
By VAN KAMPEN FUNDS INC.
(Depositor)
By: Gina Costello
Assistant Secretary
(SEAL)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below on April 26, 1999 by the
following persons who constitute a majority of the Board of Directors of Van
Kampen Funds Inc.:
SIGNATURE TITLE
Richard F. Powers III Chairman and Chief Executive )
Officer )
John H. Zimmerman III President and Chief Operating )
Officer )
William R. Rybak Executive Vice President and )
Chief Financial Officer )
A. Thomas Smith III Executive Vice President, )
General Counsel and Secretary )
Michael H. Santo Executive Vice President )
Gina M. Costello______________
(Attorney in Fact)*
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* An executed copy of each of the related powers of attorney is filed herewith
or was filed with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Van Kampen Focus Portfolios, Series 136
(File No. 333-70897) and the same are hereby incorporated herein by this
reference.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated March 12, 1999 accompanying the financial
statements of Van Kampen American Capital Equity Opportunity Trust, Series 12 as
of December 31, 1998, and for the period then ended, contained in this
Post-Effective Amendment No. 4 to Form S-6.
We consent to the use of the aforementioned report in the Post-Effective
Amendment and to the use of our name as it appears under the caption "Auditors".
GRANT THORNTON LLP
Chicago, Illinois
April 26, 1999
