File No. 33-62131
CIK #896983
Securities and Exchange Commission
Washington, D.C. 20549-1004
Amendment No. 1
to
Form S-6
For Registration under the Securities Act of 1933 of Securities of Unit
Investment Trusts Registered on Form N-8B-2.
A. Exact Name of Trust: Van Kampen American Capital Equity
Opportunity Trust, Series 19
B. Name of Depositor: Van Kampen American Capital Distributors, Inc.
C. Complete address of Depositor's principal executive offices:
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
D. Name and complete address of agents for service:
Chapman and Cutler Van Kampen American Capital
Distributors, Inc.
Attention: Mark J. Kneedy Attention: Don G. Powell, Chairman
111 West Monroe Street One Parkview Plaza
Chicago, Illinois 60603 Oakbrook Terrace, Illinois 60181
E. Title and amount of securities being registered: An indefinite
number of Units of proportionate interest pursuant to Rule 24f-2
under the Investment Company Act of 1940
F. Proposed maximum offering price to the public of the securities
being registered: Indefinite
G. Amount of registration fee: $500 (previously paid)
H. Approximate date of proposed sale to the public:
As Soon As Practicable After the Effective Date of the
Registration Statement
/ X / Check box if it is proposed that this filing will become
effective on September 21, 1995 at 2:00 P.M. pursuant to Rule 487.
The registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a) may determine.
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
Van Kampen American Capital Equity Opportunity Trust
Series 19
Cross Reference Sheet
Pursuant to Rule 404(c) of Regulation C
under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction
1 as to Prospectus on Form S-6)
Form N-8B-2 Form S-6
Item Number Heading in Prospectus
I. Organization and General Information
1. (a) Name of trust ) Prospectus Front Cover Page
(b) Title of securities issued ) Prospectus Front Cover Page
2. Name and address of Depositor ) Summary of Essential Financial
) Information
) Trust Administration
3. Name and address of Trustee ) Summary of Essential Financial
) Information
) Trust Administration
4. Name and address of principal ) *
underwriter
5. Organization of trust ) The Trust
6. Execution and termination of ) The Trust
Trust Indenture and Agreement ) Trust Administration
7. Changes of Name ) *
8. Fiscal year ) *
9. Material Litigation ) *
II. General Description of the Trust and
Securities of the Trust
10. General information regarding ) The Trust
trust's securities and ) Tax Status
rights of security holders ) Public Offering
) Rights of Unitholders
) Trust Administration
11. Type of securities comprising ) Prospectus Front Cover Page
units ) The Trust
) Trust Portfolio
12. Certain information regarding ) *
periodic payment certificates )
13. (a) Loan, fees, charges and expenses ) Prospectus Front Cover
Page
) Summary of Essential Financial
) Information
) Trust Portfolio
)
) Trust Operating Expenses
) Public Offering
) Rights of Unitholders
(b) Certain information regarding )
periodic payment plan ) *
certificates )
(c) Certain percentages ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
)
) Public Offering
) Rights of Unitholders
(d) Certain other fees, expenses or ) Trust Operating
Expenses
charges payable by holders ) Rights of Unitholders
(e) Certain profits to be received ) Public Offering
by depositor, principal ) *
underwriter, trustee or any ) Trust Portfolio
affiliated persons )
(f) Ratio of annual charges ) *
to income )
14. Issuance of trust's securities ) Rights of Unitholders
15. Receipt and handling of payments ) *
from purchasers )
16. Acquisition and disposition of ) The Trust
underlying securities ) Rights of Unitholders
) Trust Administration
17. Withdrawal or redemption ) Rights of Unitholders
) Trust Administration
18. (a) Receipt and disposition ) Prospectus Front Cover Page
of income ) Rights of Unitholders
(b) Reinvestment of distributions ) *
(c) Reserves or special funds ) Trust Operating Expenses
) Rights of Unitholders
(d) Schedule of distributions ) *
19. Records, accounts and reports ) Rights of Unitholders
) Trust Administration
20. Certain miscellaneous provisions ) Trust Administration
of Trust Agreement )
21. Loans to security holders ) *
22. Limitations on liability ) Trust Portfolio
) Trust Administration
23. Bonding arrangements ) *
24. Other material provisions of ) *
Trust Indenture Agreement )
III. Organization, Personnel and Affiliated
Persons of Depositor
25. Organization of Depositor ) Trust Administration
26. Fees received by Depositor ) *
27. Business of Depositor ) Trust Administration
28. Certain information as to ) *
officials and affiliated )
persons of Depositor )
29. Companies owning securities ) *
of Depositor )
30. Controlling persons of Depositor ) *
31. Compensation of Officers of ) *
Depositor )
32. Compensation of Directors ) *
33. Compensation to Employees ) *
34. Compensation to other persons ) *
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities ) Public Offering
by states )
36. Suspension of sales of trust's ) *
securities )
37. Revocation of authority to ) *
distribute )
38. (a) Method of distribution )
)
(b) Underwriting agreements ) Public Offering
)
(c) Selling agreements )
39. (a) Organization of principal ) *
underwriter )
(b) N.A.S.D. membership by ) *
principal underwriter )
40. Certain fees received by ) *
principal underwriter )
41. (a) Business of principal ) Trust Administration
underwriter )
(b) Branch offices or principal ) *
underwriter )
(c) Salesmen or principal ) *
underwriter )
42. Ownership of securities of ) *
the trust )
43. Certain brokerage commissions ) *
received by principal underwriter )
44. (a) Method of valuation ) Prospectus Front Cover Page
) Summary of Essential Financial
) Information
) Trust Operating Expenses
) Public Offering
(b) Schedule as to offering ) *
price )
(c) Variation in offering price ) *
to certain persons )
46. (a) Redemption valuation ) Rights of Unitholders
) Trust Administration
(b) Schedule as to redemption ) *
price )
47. Purchase and sale of interests ) Public Offering
in underlying securities ) Trust Administration
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of ) Trust Administration
Trustee )
49. Fees and expenses of Trustee ) Summary of Essential Financial
) Information
) Trust Operating Expenses
50. Trustee's lien ) Trust Operating Expenses
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's) Cover Page
securities ) Trust Operating Expenses
52. (a) Provisions of trust agreement )
with respect to replacement ) Trust Administration
or elimination portfolio)
securities )
(b) Transactions involving )
elimination of underlying ) *
securities )
(c) Policy regarding substitution )
or elimination of underlying ) Trust Administration
securities )
(d) Fundamental policy not ) *
otherwise covered )
53. Tax Status of trust ) Tax Status
VII. Financial and Statistical Information
54. Trust's securities during ) *
last ten years )
55. )
56. Certain information regarding ) *
57. periodic payment certificates)
58. )
59. Financial statements (Instructions ) Report of Independent
Certified
1(c) to Form S-6) ) Public Accountants
) Statement of Condition
______________________________________________
* Inapplicable, omitted, answer negative or not required
September 21, 1995
Preliminary Prospectus Dated September 21, 1995
Subject to Completion
Select Technology Growth Trust, Series 1
The Trust. Select Technology Growth Trust, Series 1 (the "Trust" ) is a
unit investment trust which is contained in Van Kampen American Capital Equity
Opportunity Trust, Series 19. The Trust offers investors the opportunity to
purchase Units representing proportionate interests in a fixed, diversified
portfolio of common stocks issued by U.S. based multi-national companies in
the high-technology industry (the "Equity Securities" ). Unless
terminated earlier, the Trust will terminate on September 21, 2000 (the "
Mandatory Termination Date" ) and any Equity Securities then held will,
within a reasonable time thereafter, be liquidated or distributed by the
Trustee. Any Equity Securities liquidated at termination will be sold at the
then current market value for such Equity 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 or her Units.
Objective of the Trust. The objective of the Trust is to provide the potential
for capital appreciation by investing in a portfolio of common stocks issued
by U.S. based multi-national companies in the high-technology industry. See
"Portfolio." Each Unit of the Trust represents an undivided fractional
interest in all the Equity Securities deposited in the Trust. There is, of
course, no guarantee that the objective of the Trust will be achieved.
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 an initial sales charge equal to the difference between the
maximum total sales charge of 4.9% of the Public Offering Price and the
maximum deferred sales charge ($0.29 per Unit). Commencing on March 21, 1996,
and on the 21st day of each month thereafter (except for September 1996),
through September 20, 1996, a deferred sales charge of $0.0414 will be
assessed per Unit per month. The monthly amount of the deferred sales charge
will accrue on a daily basis from the 21st day of the month preceeding a
deferred sales charge payment date. Unitholders will be assessed that portion
of the deferred sales charge accrued from the time they became Unitholders of
record. Units purchased subsequent to the initial deferred sales charge
payment will be subject only to that portion of the deferred sales charge
payments not yet collected. This deferred sales charge will be paid from funds
in the Income Account, if sufficient, or from the periodic sale of Equity
Securities. It is anticipated that Equity Securities may be sold during the
first year of the Trust to pay a portion of the deferred sales charge. The
total maximum sales charge assessed to Unitholders on a per Unit basis will be
4.9% of the Public Offering Price (5.152% of the aggregate value of the
Securities), subject to reduction as set forth in "Public
Offering--General" . During the initial offering period, the sales charge
is reduced on a graduated scale for sales involving at least 5,000 Units. If
Units were available for purchase at the opening of business on the Initial
Date of Deposit, the Public Offering Price per Unit would have been that
amount set forth under "Summary of Essential Financial Information" .
For sales charges in the secondary market, see "Public Offering" . The
minimum purchase is 100 Units (25 Units for a tax-sheltered retirement plan).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Additional Deposits. The Sponsor may, from time to time during a period of up
to approximately 6 months after the Initial Date of Deposit, deposit
additional Equity Securities in the Trust, provided it maintains, as nearly as
practicable, the original proportionate relationship of the Equity Securities
in the Trust's portfolio. See "The Trust."
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." The initial estimated
distribution will be $.01 per Unit and will be made on June 30, 1996 to
Unitholders of record on June 15, 1996. Any distribution of income and/or
capital will be net of the expenses of the Trust. See "Tax Status."
Additionally, upon termination of the Trust, the Trustee will distribute, upon
surrender of Units for redemption, 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. After the initial offering period, although not
obligated to do so, the Managing Underwriter intends to maintain a market for
Units of the Trust and offer to repurchase such 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 listed Equity
Securities and the bid prices of the over-the-counter traded Equity
Securities), plus or minus a pro rata share of cash, if any, in the Capital
and Income Accounts of the Trust. If a secondary market is maintained during
the initial offering period, the prices at which Units will be repurchased
will be based upon the aggregate underlying value of the Equity Securities in
the Trust (generally determined by the closing sale prices of the listed
Equity Securities and the ask prices of the over-the-counter traded Equity
Securities), plus or minus a pro rata share of cash, if any, in the Capital
and Income Accounts of the Trust. If a secondary market is not maintained, a
Unitholder may redeem Units through redemption at prices based upon the
aggregate underlying value of the Equity Securities in the Trust (generally
determined by the closing sale prices of the listed Equity Securities and the
bid prices of the over-the-counter traded Equity Securities), plus or minus a
pro rata share of cash, if any, in the Capital and Income Accounts of the
Trust. A Unitholder tendering 2,500 Units or more for redemption may request
an In Kind Distribution of shares of Equity Securities (reduced by customary
transfer and registration charges) in lieu of payment in cash. See "Rights
of Unitholders--Redemption of Units."
Termination. 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 sale of the
Equity Securities. At least 60 days prior to the Mandatory Termination Date
the Trustee will provide written notice thereof to all Unitholders and will
include with such notice a form to enable Unitholders to elect a distribution
of shares of Equity Securities if such Unitholder owns at least 2,500 Units of
the Trust rather than to receive payment in cash for such Unitholder's pro
rata share of the amounts realized upon the disposition by the Trustee of
Equity Securities. All Unitholders will receive cash in lieu of any fractional
shares. To be effective, the election form, and other documentation required
by the Trustee, must be returned to the Trustee at least ten business days
prior to the Mandatory Termination Date. Unitholders not electing a
distribution of shares of Equity Securities will receive a cash distribution
from the sale of the remaining Securities within a reasonable time after the
Trust is terminated. See "Trust Administration--Amendment or
Termination."
Reinvestment Option. Unitholders have the opportunity to have their
distributions reinvested into additional Units of the Trust subject only to
the deferred sales charge payments as described herein. The reinvestment
option will be subject to availability of Units and the Sponsor may suspend or
terminate the reinvestment option at any time. See "Rights of
Unitholders--Reinvestment Option."
Risk Factors. An investment in the Trust should be made with an understanding
of the risks associated therewith, including, among other factors, the
possible deterioration of either the financial condition of the issuers or the
general condition of the stock market, volatile interest rates, economic
recession, and risks specific to the high-technology industry such as rapid
product obsolescence due to dynamic industry development. The Trust is not
actively managed and Equity Securities will not be sold by the Trust to take
advantage of market fluctuations or changes in anticipated rates of
appreciation. Units of the Trust are not deposits or obligations of, or
guaranteed or endorsed by, any bank and are not federally insured or otherwise
protected by the Federal Deposit Insurance Corporation, the Federal Reserve
Board or any other agency and involve investment risk, including the possible
loss of principal. See "Risk Factors."
<TABLE>
Summary of Essential Financial Information
As of the Close of Business on the Day Before the Initial Date of Deposit: September 20, 1995
Managing Underwriter and Sub-Supervisor(1): Gruntal & Co., Incorporated
Sponsor: Van Kampen American Capital Distributors, Inc.
Supervisor(1): Van Kampen American Capital Investment Advisory Corp.
(A subsidiary of the Sponsor)
Evaluator: American Portfolio Evaluation Services
(A division of a subsidiary of the Sponsor)
Trustee: The Bank of New York
<CAPTION>
GENERAL INFORMATION
<S> <C>
Number of Units...................................................................................................... 100,000
Fractional Undivided Interest in the Trust per Unit.................................................................. 1/100,000
Public Offering Price:
Aggregate Value of Equity Securities in Portfolio <F2>............................................................... $ 977,828
Aggregate Value of Equity Securities per Unit........................................................................ $ 9.78
Maximum Sales Charge 4.9% (5.152% of the Aggregate Value of Equity Securities per Unit) <F3>......................... $ .49
Less Deferred Sales Charge per Unit.................................................................................. $ .29
Public Offering Price per Unit <F3><F4>.............................................................................. $ 9.98
Redemption Price per Unit............................................................................................ $ 9.78
Secondary Market Repurchase Price per Unit .......................................................................... $ 9.78
Excess of Public Offering Price per Unit over Redemption Price per Unit.............................................. $ .20
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Supervisor's Annual Supervisory Fee <F1>..........Maximum of $.0025 per Unit
Evaluator's Annual Evaluation Fee.................Maximum of $.0025 per Unit
Evaluation Time...................................4:00 P.M. New York time
Mandatory Termination Date........................September 21, 2000
Minimum Termination Value.........................The Trust may be terminated if the net asset value of the Trust is
less than 40% of the total value of Equity Securities deposited in
the Trust during the primary offering period
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Calculation of Estimated Net Annual Dividends per Unit <F5>
Estimated Gross Annual Dividends per Unit............................................................................ $ .03276
Less: Estimated Annual Expense per Unit ............................................................................. $ .02310
Estimated Net Annual Dividends per Unit ............................................................................. $ .00966
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Trustee's Annual Fee............................$ .008 per Unit
Estimated Annual Organizational Expenses <F6>...$ .0059 per Unit
Fifteenth day of June
Income Account Record Date......................and December
Last day of June and
Income Account Distribution Date................December
Fifteenth day of
Capital Account Record Date.....................December
Capital Account Distribution Date <F7>..........Last day of December
<FN>
<F1>Pursuant to a contractual arrangement with the Supervisor, Gruntal & Co.,
Incorporated will provide to the Supervisor on an agency basis supervisory
services in return for the entire supervisory fee.
<F2>Each Equity Security listed on a national securities exchange is valued at the
closing sale price, or if the Equity Security is not so listed, at the ask
price thereof.
<F3>The Maximum Sales Charge consists of an initial sales charge and a deferred
sales charge. The initial sales charge is applicable to all Units and
represents an amount equal to the difference between the Maximum Sales Charge
of 4.9% of the Public Offering Price and the amount of the maximum deferred
sales charge of $0.29 per Unit. Subsequent to the Initial Date of Deposit, the
amount of the initial sales charge will vary with changes in the aggregate
value of the Securities in the Trust. In addition to the initial sales charge,
Unitholders will pay a deferred sales charge of $0.0414 per Unit commencing
March 21, 1996 and on the 21st day of each month thereafter (except for
September 1996) through September 20, 1996. Units purchased subsequent to the
initial deferred sales charge payment will be subject only to that portion of
the deferred sales charge payments not yet collected. These deferred sales
charge payments will be paid from funds in the Income Account, if sufficient,
or from the periodic sale of Securities. The total maximum sales charge will
be 4.9% of the Public Offering Price (5.152% of the aggregate value of the
Securities in the Trust). See the "Fee Table" below and "Public
Offering Price--Offering Price" . On the Initial Date of Deposit there will
be no cash in the Income or Capital Accounts. Anyone ordering Units after such
date will have included in the Public Offering Price a pro rata share of any
cash in such Accounts.
<F4>Commencing on September 23, 1996, the secondary market sales charge will not
include deferred payments but will instead include only a one-time initial
sales charge of 4.4% of the Public Offering Price and will decrease by .5 of
1% on each subsequent September 23 to a minimum sales charge of 2.9% as
described under "Public Offering" .
<F5>Estimated annual dividends are based on annualizing the most recently paid
quarterly or semi-annual ordinary dividends.
<F6>The Trust (and therefore Unitholders) will bear all or a portion of its
organizational costs (including costs of preparing the registration statement,
the trust indenture and other closing documents, registering Units with the
Securities and Exchange Commission and states, the initial audit of the Trust
portfolio and the initial fees and expenses of the Trustee but not including
the expenses incurred in the preparation and printing of brochures and other
advertising materials and any other selling expenses) as is common for mutual
funds. Estimated organizational expenses will be amortized over the life of
the Trust. See "Expenses of the Trust" and "Statement of
Condition." Historically, the sponsors of unit investment trusts have paid
all the costs of establishing such trusts. Estimated Annual Organizational
Expenses have been estimated based on a projected trust size of $20,000,000.
To the extent the Trust is larger or smaller, the actual organizational
expenses paid by the Trust (and therefore by Unitholders) will vary from the
estimated amount set forth above.
<F7>Distributions from the Capital Account will be made monthly on the last day of
the month to Unitholders of record on the fifteenth day of such month if the
amount available for distribution equals at least $0.01 per Unit.
</TABLE>
FEE TABLE
This Fee Table is intended to assist investors in understanding the costs and
expenses that an investor in the Trust will bear directly or indirectly. See
"Public Offering Price--Offering Price" and "Trust Operating Expenses" .
Although the Trust has a term of five years, and is a unit investment trust
rather than a mutual fund, this information is presented to permit a
comparison of fees.
<TABLE>
<CAPTION>
Amount Per
Unitholder Transaction Expenses 100 Units
<S> <C> <C>
Maximum Initial Sales Charge Imposed on Purchase (as a percentage of offering price) 2.00% <F1> $ 20.00
Deferred Sales Charge per Year (as a percentage of original purchase price) 2.90% <F2> 29.00
4.90% $ 49.00
Estimated Annual Trust Operating Expenses
(as a percentage of average net assets)
Trustee's Fee 0.080% $ 0.80
Portfolio Supervision and Evaluation Fees 0.050% 0.50
Organizational Expenses 0.059% 0.59
Other Operating Expenses 0.042% 0.42
Total 0.231% $ 2.31
</TABLE>
Example
<TABLE>
<CAPTION>
Cumulative Expenses Paid for Period of:
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment, assuming the
estimated operating expense ratio of 0.231% and the applicable sales charge on the
Trust and a 5% annual return on the investment throughout the periods $ 51 $ 114 $ 179 $ 352
The example assume reinvestment of all dividends and distributions and
utilizes a 5% annual rate of return as mandated by Securities and Exchange
Commission regulations applicable to mutual funds. For purposes of the
example, the deferred sales charge imposed on reinvestment of dividends is not
reflected until the year following payment of the dividend; the cumulative
expenses would be higher if sales charges on reinvested dividends were
reflected in the year of reinvestment. The examples should not be considered
representations of past or future expenses or annual rate of return; the
actual expenses and annual rate of return may be more or less than those
assumed for purposes of the examples.
<FN>
<F1>The Maximum Initial Sales Charge is actually the difference between 4.90% and
the maximum deferred sales charge ($29.00 per 100 Units) and would exceed 2%
if the Public Offering Price exceeds $1,000 per 100 Units or would be less
than 2% if the Public Offering Price is less than $1,000 per 100 Units.
<F2>The actual fee is $2.90 per month per 100 Units, irrespective of purchase or
redemption price, deducted monthly commencing March 21, 1996 through September
20, 1996. If a Unitholder sells or redeems Units before all of these
deductions have been made, the balance of the deferred sales charge payments
remaining will be deducted from the sales or redemption proceeds. If Unit
price exceeds $10 per Unit, the deferred portion of the sales charge will be
less than 2.90%; if Unit price is less than $10 per Unit, the deferred portion
of the sales charge will exceed 2.90%. Units purchased subsequent to the
initial deferred sales charge payment will be subject to only that portion of
the deferred sales charge payments not yet collected.
<F3>Reinvested dividends will be subject only to the deferred sales charge
remaining at the time of reinvestment. See "Rights of Unitholders
--Reinvestment Option" .
</TABLE>
THE TRUST
Van Kampen American Capital Equity Opportunity Trust, Series 19 is comprised
of one unit investment trust, Select Technology Growth Trust, Series 1 (the
"Trust" ). The Trust was created under the laws of the State of New
York pursuant to a Trust Indenture and Agreement (the "Trust Agreement"
), dated the date of this Prospectus (the "Initial Date of Deposit" ),
among Van Kampen American Capital Distributors, Inc., as Sponsor, American
Portfolio Evaluation Services, a division of Van Kampen American Capital
Investment Advisory Corp., as Evaluator, Van Kampen American Capital
Investment Advisory Corp., as Supervisor and The Bank of New York, as Trustee.
The Trust may be an appropriate medium for investors who desire to participate
in a diversified portfolio of equity securities issued by U.S. based
multi-national companies in the high-technology industry. Diversification of
assets in the Trust will not eliminate the risk of loss always inherent in the
ownership of securities. For a breakdown of the portfolio see "Trust
Portfolio."
On the Initial Date of Deposit, the Sponsor deposited with the Trustee the
Equity Securities indicated under "Portfolio" herein, including
delivery statements relating to contracts for the purchase of certain such
Equity 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 Equity Securities (and contracts) so deposited,
delivered to the Sponsor documentation evidencing the ownership of that number
of Units of the Trust indicated in "Summary of Essential Financial
Information." Unless otherwise terminated as provided in the Trust
Agreement, the Trust will terminate on the Mandatory Termination Date and
Equity Securities then held will within a reasonable time thereafter be
liquidated or distributed by the Trustee.
Additional Units of the Trust may be issued at any time by depositing in the
Trust additional Equity Securities, contracts to purchase securities or
irrevocable letters of credit or cash with instructions to purchase additional
Equity Securities in exchange for the corresponding number of additional
Units. As additional Units are issued by the Trust as a result of the deposit
of additional Equity Securities by the Sponsor, the aggregate value of the
securities in the Trust will be increased and the fractional undivided
interest in the Trust represented by each Unit will be decreased. The Sponsor
may continue to make additional deposits of Equity Securities (or cash or a
letter of credit with instructions to purchase additional Equity Securities)
into the Trust for a period of up to 6 months following the Initial Date of
Deposit, provided that such additional deposits will be in amounts which will
maintain, as nearly as is practicable, the original proportionate relationship
of the Equity Securities in the Trust's portfolio. Any deposit by the Sponsor
of additional Securities will duplicate, as nearly as practicable, this
original proportionate relationship and not the actual proportionate
relationship on the subsequent date of deposit, since the actual proportionate
relationship may be different than the original proportionate relationship.
Any such difference may be due to the sale, redemption or liquidation of any
of the Equity Securities deposited in the Trust on the Initial, or any
subsequent, Date of Deposit.
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 or
additional Units are issued as a result of additional Equity Securities being
deposited by the Sponsor, the fractional undivided interest in the Trust
represented by each unredeemed Unit will increase or decrease 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 Managing Underwriter, or
until the termination of the Trust Agreement.
OBJECTIVES AND SECURITIES SELECTION
The objective of the Trust is to provide investors with the potential for
capital appreciation. The portfolio is described under "Trust
Portfolio" and "Portfolio" herein. The Trust seeks to achieve its
objective through a portfolio of domestic equity securities of industry market
leaders that present the potential for growth in the expanding areas of
communications, large-scale computers, semiconductors and semiconductor
fabrication equipment. By investing in a number of areas within the computer
industry, the Trust seeks to provide diversity which may help to minimize the
effects of rapidly changing product life cycles and stock market fluctuations
inherent to the high-technology industry. An investor will be subjected to
taxation on the dividend income, if any, received from the Trust and on gains
from the sale or liquidation of Equity Securities (see "Tax Status" ).
Investors should be aware that there is not any guarantee that the objective
of the Trust will be achieved because the market value of the Equity
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 Equity Securities will increase or that the
issuers of the Equity Securities will pay dividends on outstanding common
shares. Any distributions of income will generally depend upon the declaration
of dividends by the issuers of the Equity Securities and the declaration of
any dividends depends upon several factors including the financial condition
of the issuers and general economic conditions.
In the opinion of Gruntal & Co., Incorporated, the high-technology industry
offers an attractive investment opportunity for investors seeking the
potential for long-term growth. The high-technology industry is currently
dominated worldwide by a relatively small number of U.S. companies that have
created today's technology and are developing the technology of the future.
Gruntal & Co., believes that an expanding worldwide market, lower prices and
increased ease of use should generate substantial growth for personal
computers and all related products. Accordingly, Gruntal & Co. believes that
the computer industry is just entering its adolescence and the universal
appeal of personal computers will continue to drive demand for years to come.
Multitudes of new buyers are seeking new technological products for personal
use and personal computers have become affordably priced systems for many
buyers in less-developed countries. Consumers already use computers for
shopping, paying bills, sending letters, entertainment and education, and as
the industry grows, consumers are likely to buy personal computers to travel
the information highway. Furthermore, companies dedicated to improving
productivity are continually investing in and upgrading computers to remain
competitive--according to industry estimates, there are 50 personal computers
installed per 100 workers in the U.S. compared to 22 in western Europe, 17 in
Japan and even less in other countries, representing an opportunity for
worldwide growth. Because technology has become a vital part of life and a key
to the economic future of businesses and individuals, Gruntal & Co.
anticipates more growth in the high-technology sector than almost any other
industry. In selecting the Equity Securities, Gruntal & Co. considered the
following factors, among others: the company's ability to develop leading-edge
technology, attractiveness of market fundamentals, management's ability to
succeed in a rapidly changing environment, the development of a company's
product line, the company's strength within its sector and maintaining
portfolio diversification within the high-technology industry.
The Equity Securities were selected by Gruntal & Company's high-technology
market analyst team, Roxane Googin and Mona Eraiba. Roxane Googin received her
M.B.A. from the University of Virginia, her B.S. in Engineering from the
University of Tennessee, and she has over 10 years of experience in the
high-technology industry. Ms. Googin recently earned The Wall Street Journal's
top All-Star Analyst ranking in the computer networking stocks sector. In
selecting the Equity Securities, Ms. Googin concentrated on identifying the
growth potential of U.S. computer companies involved in the areas of
communications and large-scale computing. Mona Eraiba received her M.B.A. from
Columbia University in New York, her B.S. in Electrical Engineering from
Washington University and has over 12 years of investment experience,
including a specialization in high-technology issues. In selecting the Equity
Securities, Ms. Eraiba concentrated on the potential growth found in equities
of companies involved in the areas of semiconductors and semiconductor
fabrication equipment. Investors should be aware that members of the Managing
Underwriter's research department, including Ms. Googin and Ms. Eraiba, are
compensated based on brokerage commissions generated from their research and
on the dollar amount of sales of the Trust. In addition, Ms. Googin and Ms.
Eraiba may trade the Equity Securities in their own personal accounts.
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,
Equity Securities will not be sold by the Trust to take advantage of market
fluctuations or changes in anticipated rates of appreciation. Investors should
note in particular that the Equity Securities were selected by the Managing
Underwriter prior to the Initial Date of Deposit and the portfolio is designed
to achieve the objective of the Trust over the entire term of the Trust. The
Trust may continue to purchase or hold Equity Securities originally selected
through this process even though the evaluation of the attractiveness of the
Equity Securities may have changed and, if the evaluation were performed again
at that time, the Equity Securities would not be selected for the Trust.
TRUST PORTFOLIO
The Trust consists of the following 24 issues of Equity Securities issued by
U.S. based multi-national companies in the high-technology industry. All of
the Equity Securities are listed on a national securities exchange, the NASDAQ
National Market System or traded in the over-the-counter market. Each of the
companies whose Equity Securities are included in the portfolio were selected
based upon those factors referred to under "Objectives and Securities
Selection" above. The following is a general description of each of the
companies included in the Trust.
Adobe Systems, Inc. develops, markets and supports computer software product
and technologies. The company's products allow users to create, display, print
and communicate electronic documents. Adobe licenses its technology to major
computer, printing and publishing suppliers and markets a line of products for
home and small business users.
Applied Materials, Inc. develops, manufactures, sells and services
semiconductor wafer fabrication equipment worldwide. The company's products
include deposition, etching and ion implantation systems. Applied Materials
also has an equity interest in Applied Komatsu Technology, Inc., which
produces thin film transistor fabrication systems for float panel displays.
Autodesk, Inc. is a worldwide supplier of design and PC software. The company
develops, markets and supports a family of design and professional multi-media
software and component technologies for use on personal computers and
workstations.
Cascade Communications Corporation designs, develops and maintains a line of
multi-service wide area network (WAN) switches. The switches allow network
users to direct and manage communications across WANs that use different
network services. Cascade markets its products to public network carriers
including, Competitive Access Providers, Regional Bell Operating Companies and
local carriers.
Cisco System, Inc. develops, manufactures, markets and supports multi-protocol
inter-networking systems that enable customers to build large scale computer
networks. The principal products include routers with concurrent bridging and
terminal servers. The company sells its products internationally to system
integrators who then resell the products primarily to government customers.
Cypress Semiconductor Corporation designs and manufactures digital integrated
circuits that are used in applications of proprietary sub-micron complementary
metal oxide silicon technologies. The products are marketed nationwide to
personal computer, mainframe computer, workstation, military and aerospace,
telecommunications and instrumentation markets.
Hewlett-Packard Company designs, manufactures and services electronic
measurement, analysis and computation instruments. The company produces
computers, calculators, workstations, video displays, printers, disc and tape
drives, medical diagnostic and monitoring devices and mass spectrometers.
Hewlett-Packard sells its products in the United States and other countries.
Informix Corporation develops and markets computer software. The company
produces database management programs and combination database management,
word processor and spreadsheet packages which run on minicomputers,
microcomputers and personal computers. Informix sells its software in the
United States, Japan and other countries.
Intel Corporation designs, manufactures and sells microcomputer components and
related products. The company's products include microprocessors, embedded
products, memory chips, computer modules and boards, network and communication
hardware and software products, personal conferencing software and cards and
parallel supercomputers. Intel sells its products worldwide.
International Business Machines Corporation manufactures mainframe computers
and other information processing equipment. The company also supplies micro
and personal computers, software and networking products and peripheral
equipment. Products are sold or leased for use in business, government,
science, education, space, medicine and other areas on a worldwide basis.
LSl Logic Corporation designs, makes, markets and provides service for
application specific integrated circuits, microprocessors and application
specific standard product such as chip sets and graphics board. Products are
primarily marketed to manufacturers in the computer, telecommunications,
consumer and defense industries.
Lattice Semiconductor Corporation designs, develops and markets high speed
programmable logic devices (PLD's). The proprietary PLD's provide electronic
systems customers with quickly designed, easily configured components. The
products are marketed worldwide to original equipment manufacturers of
microcomputers, graphic systems, workstations, telecommunication and
industrial controls.
Linear Technology Corporation manufactures linear integrated circuits. The
company produces operational and instrumentation amplifiers, voltage and
switching regulators, voltage references, monolithic switched-capacitor
filters, high frequency and high current voltage converters and other
circuits. Linear sells its products to original equipment manufacturers in the
United States and other countries.
Microsoft Corporation develops, manufactures, licenses and supports computer
software products. The company offers the "Microsoft MS-DOS" and "
Microsoft Windows" operating systems, networking products, "Microsoft
Access" , "Microsoft FoxPro" and "Microsoft SOL Server"
database management products, "Microsoft Excel" spreadsheet, books and
other business and consumer products.
Motorola, Inc. designs, manufactures and sells, mainly under the Motorola
brand, a diversified line of electronic equipment and components. These
products include two-way land mobile communications systems, paging and other
electronic communication systems, semiconductors and electronic equipment for
military and aerospace use.
National Semiconductor Corporation designs, develops, manufactures and markets
a variety of semiconductor products. These products include microprocessors,
linear and digital integrated circuits, hybrid circuits and subsystems,
electronic packaging and miscellaneous services and supplies for the
semiconductor industry worldwide.
Netscape Communications Corporation provides software for the exchange of
information and commerce over the internet or private Internet Protocol
networks. The company designs its products for high performance, ease of use
and security. Netscape sells its products worldwide.
Octel Communications Corporation designs, manufactures and markets voice
processing systems which are sold primarily to large corporate customers and
providers of voice information services in the United States and abroad. The
company provides a broad family of products, features, telephone switch
integrations and networking capabilities.
Oracle Corporation designs, develops, markets and supports computer software
products with a variety of uses, including database management, applications
development, decision support, end user applications and office automation.
Oracle's primary product, the Oracle Relational Database Management System,
runs on a broad range of mainframes, minicomputers, microcomputers and PC's.
Seagate Technology, Inc. produces and markets over a 100 rigid disc drive
models with form factors up to 9 Gigabytes. These drives record, store and
retrieve digital information that cannot be stored in its entirety in the
central processing unit. The company's products are distributed to original
equipment manufacturers, value added resellers and various dealers.
Tellabs, Inc. designs, assembles, markets and services voice and data
networking products used by providers of telecommunications services in public
and private voice data networks worldwide. These products include digital
systems, data communications systems and network access systems. Customers
include Bell companies, independent telephone companies, government agencies
and businesses.
Teradyne, Inc. manufactures electronic systems, software and electronic
connection systems. The company's electronics systems and software are used in
the design and testing of electronic components. Teradyne also manufactures
backplane connection systems, which are used to support circuit boards in an
electronic assembly.
Texas Instruments, Inc. manufactures and sells electronic products. The
company's products include semiconductors, control devices, radar, missile
guidance systems, printers and calculators. Texas Instruments sells to
governmental, industrial and consumer markets.
VLSl Technology, Inc. designs, manufactures and markets application-specific
integrated circuits and application-specific standard products to meet the
needs of a customer with a highly specialized product requirement. The
products are sold to original equipment manufacturers through direct sales
force, commissioned representatives and distributors worldwide.
General. The Trust consists of such of the Equity Securities listed under "
Portfolio" as may continue to be held from time to time in the Trust and
any additional Equity Securities acquired and held by the Trust pursuant to
the provisions of the Trust Agreement together with cash held in the Income
and Capital Accounts. Neither the Sponsor nor the Trustee shall be liable in
any way for any failure in any of the Equity Securities. However, should any
contract for the purchase of any of the Equity Securities initially deposited
hereunder fail, the Sponsor will, unless substantially all of the moneys held
in the Trust to cover such purchase are reinvested in substitute Equity
Securities in accordance with the Trust Agreement, refund the cash and sales
charge attributable to such failed contract to all Unitholders on the next
distribution date.
Because certain of the Equity Securities from time to time may be sold under
certain circumstances described herein, and because the proceeds from such
events will be distributed to Unitholders and will not be reinvested, no
assurance can be given that the Trust will retain for any length of time its
present size and composition. Although the portfolio is not managed, the
Sponsor may instruct the Trustee to sell Equity Securities under certain
limited circumstances. Pursuant to the Trust Agreement and with limited
exceptions, the Trustee may sell any securities or other property 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). See "Trust Administration--Portfolio
Administration." Equity Securities, however, will not be sold by the Trust
to take advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation.
Unitholders will be unable to dispose of any of the Equity Securities as such
and will not be able to vote the Equity Securities. As the holder of the
Equity Securities, the Trustee will have the right to vote all of the voting
stocks in the Trust and will vote such stocks in accordance with the
instructions of the Sponsor.
The Managing Underwriter may acquire the Equity Securities for the Sponsor.
The Managing Underwriter in its general securities business acts as agent or
principal in connection with the purchase and sale of equity securities,
including the Equity Securities in the Trust, and may act as a market maker in
certain of the Equity Securities. The Managing Underwriter may also, from time
to time, issue reports on and make recommendations relating to equity
securities, which may include the Equity Securities. From time to time the
Managing Underwriter may act as investment banker or an employee or affiliate
may be a director of a company whose shares are included among the Equity
Securities; nonpublic information concerning such a company would not be
disclosed to the Managing Underwriter or for the benefit of the Trust under
such circumstances.
RISK FACTORS
An investment in Units of the Trust should be made with an understanding of
the characteristics of the high-technology industry and the risks which such
an investment may entail. The market for high-technology products is
characterized by rapidly changing technology, rapid product obsolescence,
cyclical market patterns, evolving industry standards and frequent new product
introductions. The success of the issuers of the Equity Securities depends in
substantial part on the timely and successful introduction of new products. An
unexpected change in one or more of the technologies affecting an issuer's
products or in the market for products based on a particular technology could
have a material adverse affect on an issuer's operating results. Furthermore,
there can be no assurance that the issuers of the Equity Securities will be
able to respond timely to compete in the rapidly developing marketplace.
Based on trading history of common stock, factors such as announcements of new
products or development of new technologies and general conditions of the
industry have caused and are likely to cause the market price of
high-technology common stocks to fluctuate substantially. In addition,
technology company stocks have experienced extreme price and volume
fluctuations that often have been unrelated to the operating performance of
such companies. This market volatility may adversely affect the market price
of the Equity Securities and therefore the ability of a Unitholder to redeem
Units at a price equal to or greater than the original price paid for such
Units.
Some key components of certain products of technology issuers are currently
available only from single sources. There can be no assurance that in the
future suppliers will be able to meet the demand for components in a timely
and cost effective manner. Accordingly, an issuer's operating results and
customer relationships could be adversely affected by either an increase in
price for, or an interruption or reduction in supply of, any key components.
Additionally, many technology issuers are characterized by a highly
concentrated customer base consisting of a limited number of large customers
who may require product vendors to comply with rigorous industry standards.
Any failure to comply with such standards may result in a significant loss or
reduction of sales. Because many products and technologies of technology
companies are incorporated into other related products, such companies are
often highly dependent on the performance of the personal computer,
electronics and telecommunications industries. There can be no assurance that
these customers will place additional orders, or that an issuer of Equity
Securities will obtain orders of similar magnitude as past orders from other
customers. Similarly, the success of certain technology companies is tied to a
relatively small concentration of products or technologies. Accordingly, a
decline in demand of such products, technologies or from such customers could
have a material adverse impact on issuers of the Equity Securities.
Certain issuers of the Equity Securities may derive a significant amount of
business in foreign markets. Many countries, especially emerging market
countries, have regulatory requirements that differ from U.S. requirements and
are characterized by less developed and more volatile economies. International
sales and operations are subject to certain risks, including unexpected
changes in regulatory environments, exchange rates, tariffs and other
barriers, political and economic instability and potentially adverse tax
consequences. All of these factors could have a material adverse impact on the
financial condition of certain issuers.
Many technology companies rely on a combination of patents, copyrights,
trademarks and trade secret laws to establish and protect their proprietary
rights in their products and technologies. There can be no assurance that the
steps taken by the issuers of the Equity Securities to protect their
proprietary rights will be adequate to prevent misappropriation of their
technology or that competitors will not independently develop technologies
that are substantially equivalent or superior to such issuer's technology.
An investment in Units should also be made with an understanding of the risks
which an investment in common stocks entail, 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. The perceptions are based on unpredictable factors
including expectations regarding government, economic, monetary and fiscal
policies, inflation and interest rates, economic expansion or contraction, and
global or regional political, economic or banking crises. Shareholders of
common stocks have rights to receive payments from the issuers of those common
stocks that are generally subordinate to those of creditors of, or holders of
debt obligations or preferred stocks of, such issuers. Shareholders of common
stocks of the type held by the Trust have a right to receive dividends only
when and if, and in the amounts, declared by the issuer's board of directors
and have a right to participate in amounts available for distribution by the
issuer only after all other claims on the issuer have been paid or provided
for. Common stocks do not represent an obligation of the issuer and,
therefore, do not offer any assurance of income or provide the same degree of
protection of capital as do debt securities. The issuance of additional debt
securities or preferred stock will create prior claims for payment of
principal, interest and dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common stock or
the rights of holders of common stock with respect to assets of the issuer
upon liquidation or bankruptcy. The value of common stocks is subject to
market fluctuations for as long as the common stocks remain outstanding, and
thus the value of the Equity Securities may be expected to fluctuate over the
life of the 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,
generally have 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 of liquidation which are senior to those of common stockholders.
TAX STATUS
Federal Taxation. The following is a general discussion of certain of the
federal income tax consequences of the purchase, ownership and disposition of
the Units. The summary is limited to investors who hold the Units as "
capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Internal Revenue Code of 1986 (the "
Code" ). Unitholders should consult their tax advisers in determining the
federal, state, local and any other tax consequences of the purchase,
ownership and disposition of Units in the Trust.
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 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 received by the Trust.
2. Each Unitholder will have a taxable event when the Trust disposes of an
Equity Security (whether by sale, exchange, redemption, or payment at
maturity) or upon the sale or redemption of Units by such Unitholder. The
price a Unitholder pays for his Units, including sales charges, is allocated
among his pro rata portion of each Equity Security held by the Trust (in
proportion to the fair market values thereof on the date the Unitholder
purchase his Units) in order to determine his initial cost for his pro rata
portion of each Equity Security held by the Trust. For federal income tax
purposes, a Unitholder's pro rata portion of dividends as defined by Section
316 of the Code paid with respect to an Equity Security held by the Trust are
taxable as ordinary income to the extent of such corporation's current and
accumulated "earnings and profits" . A Unitholder's pro rata portion of
dividends paid on such Equity Security which exceed such current and
accumulated earnings and profits will first reduce a Unitholder's tax basis in
such Equity Security, and to the extent that such dividends exceed a
Unitholder's tax basis in such Equity Security shall generally be treated as
capital gain. In general, any such capital gain will be short-term unless a
Unitholder has held his Units for more than one year.
3. A Unitholder's portion of gain, if any, upon the sale or redemption of
Units or the disposition of Equity Securities held by the Trust will generally
be considered a capital gain except in the case of a dealer or a financial
institution and, in general, will be long-term if the Unitholder has held his
Units for more than one year (the date on which the Units are acquired (i.e.,
the "trade date" ) is excluded for purposes of determining whether the
Units have been held for more than one year). A Unitholder's portion of loss,
if any, upon the sale or redemption of Units or the disposition of Equity
Securities held by the Trust will generally be considered a capital loss
except in the case of a dealer or a financial institution and, in general,
will be long-term if the Unitholder has held his Units for more than one year.
Unitholders should consult their tax advisers regarding the recognition of
such capital gains and losses for federal income tax purpose.
4. The Code provides that "miscellaneous itemized deductions" are
allowable only to the extent that they exceed two percent of an individual
taxpayer's adjusted gross income. Miscellaneous itemized deductions subject to
this limitation under present law include a Unitholder's pro rata share of
expenses paid by the Trust, including fees of the Trustee, Supervisor and the
Evaluator.
5. The Unitholder's basis in his Units will be equal to the cost of his Units,
including the initial sales charge. A portion of the sales charge is deferred.
The proceeds received by a Unitholder upon any termination of the Trust or
redemption of Units prior to collection of the entire deferred sales charge
amount will reflect deduction of the deferred amount (the "Deferred Sales
Charge Amount" ). The annual statement and the relevant tax reporting forms
received by Unitholders will reflect the actual amounts paid to them, net of
the Deferred Sales Charge Amount. Accordingly, Unitholders should not increase
their basis in their Units by the Deferred Sales Charge Amount.
Dividends Received Deduction. A corporation that owns Units will generally be
entitled to a 70% dividends received deduction with respect to such
Unitholder's pro rata portion of dividends received by the Trust (to the
extent such dividends are taxable as ordinary income, as discussed above) in
the same manner as if such corporation directly owned the Equity Securities
paying such dividends (other than corporate Unitholders, such as "S"
corporations, which are not eligible for the deduction because of their
special characteristics' and other than for purposes of special taxes such as
the accumulated earnings tax and the personal holding corporation tax).
However, a corporation owning Units should be aware that Sections 246 and 246A
of the Code impose additional limitations on the eligibility of dividends for
the 70% dividends received deduction. These limitations include a requirement
that stock (and therefore Units) must generally be held at least 46 days (as
determined under Section 246(c) of the Code). Proposed 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. It should be noted that various
legislative proposals that would affect the dividends received deduction have
been introduced. Unitholders should consult with their tax advisers with
respect to the limitations on and possible modifications to the dividends
received deduction.
Recognition of Taxable Gain or Loss Upon Disposition of Equity Securities by
the Trust or Disposition of Units. As discussed above, a Unitholder may
recognize taxable gain (or loss) when an Equity Security is disposed of by the
Trust or if the Unitholder disposes of a Unit. For taxpayers other than
corporations, net capital gains are subject to a maximum marginal stated tax
rate of 28%. However, it should be noted that legislative proposals are
introduced from time to time that affect tax rates and could affect relative
differences at which ordinary income and capital gains are taxed.
The Revenue Reconciliation Act of 1993 (the "Act" ) raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated
rate for taxpayers other than corporations. Because some or all capital gains
are taxed at a comparatively lower rate under the Act, the Act includes a
provision that would recharacterize capital gains as ordinary income in the
case of certain financial transactions that are "conversion
transactions" effective for transactions entered into after April 30,
1993. Unitholders and prospective investors should consult with their tax
advisers regarding the potential effect of this provision on their investment
in Units.
Special Tax Consequences of In Kind Distributions Upon Redemption of Units or
Termination of the 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 assets for
federal income tax purposes. The receipt of an In Kind Distribution would be
deemed an exchange of such Unitholder's pro rata portion of each of the shares
of stock and other assets held by the Trust in exchange for an undivided
interest in whole shares of stock plus, possibly, cash.
There are generally three different potential tax consequences which may occur
under an In Kind Distribution with respect to each Equity Security owned by
the Trust. An "Equity Security" for this purpose is a particular class
of stock issued by a particular corporation. If the Unitholder receives only
whole shares of an Equity Security in exchange for his or her pro rata portion
in each share of such Equity Security held by the Trust, there is not taxable
gain or loss recognized upon such deemed exchange pursuant to Section 1036 of
the Code. If the Unitholder receives whole shares of a particular Equity
Security plus cash in lieu of a fractional share of such Equity Security, and
if the fair market value of the Unitholder's pro rata portion of the shares of
such Equity Security exceeds his tax basis in his pro rata portion of such
Equity Security, taxable gain would be recognized in an amount not to exceed
the amount of such cash received, pursuant to Section 1031(b) of the Code. No
taxable loss would be recognized upon such an exchange pursuant to Section
1031(c) of the Code, whether or not cash is received in lieu of a fractional
share. Under either of these circumstances, special rules will be applied
under Section 1031(d) of the Code to determine the Unitholder's tax basis in
the shares of such particular Equity Security which he receives as part of the
In Kind Distribution. Finally, if a Unitholder's pro rata interest in an
Equity Security does not equal a whole share, he may receive entirely cash in
exchange for his pro rata portion of a particular Equity Security. In such
case, taxable gain or loss is measured by comparing the amount of cash
received by the Unitholder with his tax basis in such Equity Security.
Because the Trust will own many Equity Securities, a Unitholder who requests
an In Kind Distribution will have to analyze the tax consequences with respect
to each Equity Security owned by the Trust. The amount of taxable gain (or
loss) recognized upon such exchange will generally equal the sum of the gain
(or loss) recognized under the rules described above by such Unitholder with
respect to each Equity Security owned by the Trust. Unitholders who request an
In Kind Distribution are advised to consult their tax advisers in this regard.
General. Each Unitholder will be requested to provide the Unitholder's
taxpayer identification number to the Trustee and to certify that the
Unitholder has not been notified that payments to the Unitholder are subject
to back-up withholding. If the proper taxpayer identification number and
appropriate certification are not provided when requested, distributions by
the Trust to such Unitholder (including amounts received upon the redemption
of Units) will be subject to back-up withholding. Distributions by the Trust
will generally be subject to United States income taxation and withholding in
the case of Units held by non-resident alien individuals, foreign corporations
or other non-United States persons. Such persons should consult their tax
advisers.
Unitholders will be notified annually of the amount of income dividends
includable in the Unitholder's gross income and amounts of Trust expenses
which may be claimed as itemized deductions.
Dividend income and long-term capital gains may also be subject to state and
local taxes. Investors should consult their tax advisers for specific
information on the tax consequences of particular types of distributions.
Unitholders desiring to purchase Units for tax-deferred plans and IRAs should
consult their broker-dealers for details on establishing such accounts. Units
may also be purchased by persons who already have self-directed plans
established.
In the opinion of Tanner Propp & Farber, 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.
TRUST OPERATING EXPENSES
Compensation of Sponsor, Evaluator, Supervisory Servicer and Managing
Underwriter. The Sponsor will not receive any fees in connection with its
activities relating to the Trust. The Evaluator shall receive that evaluation
fee, payable in any month incurred, set forth under "Summary of Essential
Financial Information" (which is based on the number of Units outstanding
on January 1 of each year for which such compensation relates except during
the initial offering period in which event the calculation is based on the
number of Units outstanding at the end of the month of such calculation) for
regularly evaluating the Trust portfolio. Such fee may exceed the actual cost
of providing such evaluation services for this Trust, but at no time will the
total amount paid to the Evaluator for providing evaluation services to unit
investment trusts of which Van Kampen American Capital Distributors, Inc. acts
as Sponsor in any calendar year exceed the aggregate cost to the Evaluator of
supplying such services in such year. The Supervisory Servicer 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" (which is based on the number of Units outstanding on January
1 of each year for which such compensation relates except during the initial
offering period in which event the calculation is based on the number of the
Units outstanding at the end of the month of such calculation) for providing
portfolio supervisory services for the Trust. Such fee 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
series of Van Kampen American Capital Equity Opportunity Trust and to any
other unit investment trusts sponsored by the Sponsor for which the Supervisor
provides portfolio supervisory services in any calendar year exceed the
aggregate cost to the Supervisor of supplying such services in such year.
Pursuant to a contract with the Supervisor, the Managing Underwriter, which is
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. 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 may realize other profits (or
losses) in connection with the sale of Units and the deposit of the Equity
Securities as described under "Public Offering--Sponsor and Managing
Underwriter Compensation."
Trustee's Fee. For its services the Trustee will receive an annual fee from
the Trust as set forth under "Summary of Essential Financial
Information" (which amount is based on the number of Units outstanding on
January 1 of each year for which such compensation relates except during the
initial offering period in which event the calculation is based on the number
of Units outstanding at the end of the month of such calculation). The
Trustee's fees are payable in monthly installments on or before the fifteenth
day of each month from the Income Account to the extent funds are available
and then from the Capital Account. The Trustee benefits to the extent there
are funds for future distributions, payment of expenses and redemptions in the
Capital and Income Accounts since these accounts are non-interest bearing and
the amounts earned by the Trustee are retained by the Trustee. Part of the
Trustee's compensation for its services to the Trust is expected to result
from the use of these funds. Such fees may be increased without approval of
the Unitholders by amounts not exceeding proportionate increases under the
category "All Services Less Rent of Shelter" in the Consumer Price
Index published by the United States Department of Labor or, if such category
is no longer published, in a comparable category. For a discussion of the
services rendered by the Trustee pursuant to its obligations under the Trust
Agreement, see "Rights of Unitholders--Reports Provided" and "
Trust Administration."
Miscellaneous Expenses. Expenses incurred in establishing the Trust, including
the cost of the initial preparation of documents relating to the Trust
(including the Prospectus, Trust Agreement and certificates), federal and
state registration fees, the initial fees and expenses of the Trustee, legal
and accounting expenses, payment of closing fees and any other out-of-pocket
expenses, will be paid by the Trust and amortized over the life of the Trust.
The following additional charges are or may be incurred by the Trust: (a)
normal expenses (including the cost of mailing reports to Unitholders)
incurred in connection with the operation of the Trust, (b) fees of the
Trustee for extraordinary services, (c) expenses of the Trustee (including
legal and auditing expenses) and of counsel designated by the Sponsor, (d)
various governmental charges, (e) expenses and costs of any action taken by
the Trustee to protect the Trust and the rights and interests of Unitholders,
(f) indemnification of the Trustee for any loss, liability or expenses
incurred in the administration of the Trust without gross negligence, bad
faith or wilful misconduct on its part and (g) expenditures incurred in
contacting Unitholders upon termination of the Trust.
The fees and expenses set forth herein are payable out of the Trust. When such
fees and expenses are paid by or 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 "Tax
Status."
PUBLIC OFFERING
General. Units are offered at the Public Offering Price (which is based on the
aggregate underlying value of the Equity Securities and includes an initial
sales charge equal to the difference between the maximum total sales charge of
4.9% of the Public Offering Price and the maximum deferred sales charge ($0.29
per Unit)). Commencing on March 21, 1996, and on the 21st day of each month
thereafter (except for September 1996), through September 20, 1996, a deferred
sales charge of $0.0414 will be assessed per Unit per month. The monthly
amount of the deferred sales charge will accrue on a daily basis from the 21st
day of the month preceeding a deferred sales charge payment date. Unitholders
will be assessed that portion of the deferred sales charge accrued from the
time they became Unitholders of record. Units purchased subsequent to the
initial deferred sales charge payment will be subject to only that portion of
the deferred sales charge payments not yet collected. This deferred sales
charge will be paid from funds in the Income Account, if sufficient, or from
the periodic sale of Securities. The total maximum sales charge assessed to
Unitholders on a per Unit basis will be 4.9% of the Public Offering Price
(5.152% of the aggregate value of the Securities in the Trust). Such
underlying value shall include the proportionate share of any undistributed
cash held in the Capital and Income Accounts.
The initial sales charge applicable to quantity purchases is reduced on a
graduated basis to any person acquiring 5,000 or more Units as follows:
<TABLE>
<CAPTION>
Aggregate Number of Percentage Sales
Units Purchased Charge Reduction Per Unit*
<S> <C>
5,000 - 9,999...................... .25%
10,000 - 24,999...................... .50%
25,000 - 49,999...................... 1.00%
50,000 - 99,999...................... 1.50%
100,000 or more....................... 2.00%
*The maximum sales charge reduction per Unit is limited to the
applicable percentage set forth in the above table or the actual
initial sales charge amount (which may be slightly less than or
greater than 2% of the Public Offering Price per Unit due to
fluctuations in Unit price). See "Fee Table" and footnote
<F1> thereto.
</TABLE>
The sales charge reduction will primarily be the responsibility of the selling
Managing Underwriter, broker, dealer or agent. Registered representatives of
selling brokers, dealers, or agents may purchase Units of the Trust at the
current Public Offering Price less the concession described under "Unit
Distribution" .
A "Qualified Gruntal Purchaser" may purchase Units of the Trust at a
Public Offering Price subject only to the deferred sales charge as described
herein (equal to a maximum of $0.29 per Unit) through September 20, 1996, and
subject to a one-time secondary market sales charge of 2.9% of the Public
Offering Price commencing September 23, 1996. The term "Qualified Gruntal
Purchaser" includes (1) employees, officers and directors of Gruntal &
Co., Incorporated, (2) immediate family members thereof (spouses, children,
grandchildren, parents, grandparents, mothers-in-law, fathers-in-law,
sons-in-law and daughters-in-law) and (3) trustees, custodians or fiduciaries
for the benefit of the persons described in (1) and (2).
Offering Price. The Public Offering Price of the Units will vary from the
amounts stated under "Summary of Essential Financial Information" in
accordance with fluctuations in the prices of the underlying Equity Securities
in the Trust.
As indicated above, the price of the Units was established by adding to the
determination of the aggregate underlying value of the Equity Securities an
amount equal to the difference between the maximum total sales charge for a
Trust of 4.9% of the Public Offering Price and the maximum deferred sales
charge for a Trust ($0.29 per Unit) and dividing the sum so obtained by the
number of Units outstanding. Such underlying value shall include the
proportionate share of any cash held in the Income and Capital Accounts. Such
price determination as of the close of business on the day before the Initial
Date of Deposit was made on the basis of an evaluation of the Equity
Securities in the Trust prepared by Interactive Data Services, Inc., a firm
regularly engaged in the business of evaluating, quoting or appraising
comparable securities. Thereafter, the Evaluator on each business day will
appraise or cause to be appraised the value of the underlying Equity
Securities as of the Evaluation Time on days the New York Stock Exchange is
open and will adjust the Public Offering Price of the Units commensurate with
such valuation. Such Public Offering Price will be effective for all orders
received 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 when the New York Stock Exchange is closed, will be held
until the next determination of price. Unitholders who purchase Units
subsequent to the Initial Date of Deposit will pay an initial sales charge
equal to the difference between the maximum total sales charge for a Trust of
4.9% of the Public Offering Price and the maximum deferred sales charge for a
Trust ($0.29 per Unit) and will be assessed a deferred sales charge of $0.0414
per Unit on each of the remaining deferred sales charge payment dates as set
forth in "Public Offering--General" . Commencing on September 23, 1996,
the secondary market sales charge will not include deferred payments but will
instead include only a one-time initial sales charge of 4.4% of the Public
Offering Price and will be reduced by .5 of 1% on each subsequent September 23
to a minimum sales charge of 2.9%.
The value of the Equity Securities during the initial offering period is
determined on each business day by the Evaluator in the following manner: if
the Equity Securities are listed on a national securities exchange, this
evaluation is generally based on the closing sale prices on that exchange
(unless it is determined that these prices are inappropriate as a basis for
valuation) or, if there is no closing sale price on that exchange, at the
closing ask prices. If the Equity Securities are not so listed or, if so
listed and the principal market therefor is other than on the exchange, the
evaluation shall generally be based on the current ask prices on the
over-the-counter market (unless it is determined that these prices are
inappropriate as a basis for evaluation). If current ask prices are
unavailable, the evaluation is generally determined (a) on the basis of
current ask prices for comparable securities, (b) by appraising the value of
the Equity Securities on the ask side of the market or (c) by any combination
of the above.
In offering the Units to the public, neither the Sponsor, the Managing
Underwriter nor any broker-dealers are recommending any of the individual
Equity Securities in the Trust but rather the entire pool of Equity
Securities, taken as a whole, which are represented by the Units.
Unit Distribution. During the initial offering period, Units will be
distributed to the public by the 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.
The Sponsor intends to qualify the Units for sale in a number of states.
Gruntal & Co. broker-dealers will be allowed a concession or agency commission
in connection with the distribution of Units during the initial offering
period of 3.5% of the Public Offering Price. All other broker-dealers will be
allowed a concession or agency commission in connection with the distribution
of Units during the initial offering period of 3.2% of the Public Offering
Price.
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. Any quantity discount provided to
investors will be borne by the selling dealer, agent, Managing Underwriter or
the Sponsor as indicated under "General" above. For secondary market
transactions, such concession or agency commission will amount to 70% of the
sales charge applicable to the transaction.
To facilitate the handling of transactions, sales of Units shall normally be
limited to transactions involving a minimum of 100 Units (25 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. Brokers and dealers of the Trust, banks and/or others are
eligible to participate in a program in which such firms receive from the
Managing Underwriter a nominal award for each of their registered
representatives who have sold a minimum number of units of unit investment
trusts created by the Managing Underwriter during a specified time period. In
addition, at various times the Managing Underwriter may implement other
programs under which the sales forces of brokers, dealers, banks and/or others
may be eligible to win other nominal awards for certain sales efforts, or
under which the Managing Underwriter will reallow to any such brokers,
dealers, banks and/or others that sponsor sales contests or recognition
programs conforming to criteria established by the Managing Underwriter, or
participate in sales programs sponsored by the Managing Underwriter, an amount
not exceeding the total applicable sales charges on the sales generated by
such person at the public offering price during such programs. Also, the
Managing Underwriter in its discretion may from time to time pursuant to
objective criteria established by the Managing Underwriter pay fees to
qualifying brokers, dealers, banks and/or others for certain services or
activities which are primarily intended to result in sales of Units of the
Trust. Such payments are made by the Managing Underwriter out of its own
assets and not out of the assets of the Trust. These programs will not change
the price Unitholders pay for their Units or the amount that the Trust will
receive from the Units sold.
Sponsor and Managing Underwriter Compensation. The Managing Underwriter will
receive a gross sales commission equal to 4.9% of the Public Offering Price of
the Units, less any reduced sales charge for quantity purchases as described
under "General" above. The Sponsor will receive from the Managing
Underwriter the excess of such gross sales commission over the Managing
Underwriter's discount. The Managing Underwriter will be allowed a discount in
connection with the distribution of Units underwritten during the initial
offering period of 4.0% per Unit distributed. Any quantity discount provided
to investors will borne by the selling Managing Underwriter, dealer or agent
as indicated under "General" above.
In addition, the Managing Underwriter will realize a profit or will sustain a
loss, as the case may be, as a result of the difference between the price paid
for the Equity Securities by the Managing Underwriter and the cost of such
Equity Securities to the Trust on the Initial Date of Deposit as well as on
subsequent deposits. See "Portfolio." 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 Equity
Securities in the Trust portfolio. The Sponsor and 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
Equity Securities in the Trust after a date of deposit, since all proceeds
received from the sale of Units (excluding dealer concessions and agency
commissions allowed, if any) will be retained by the Sponsor or Managing
Underwriter.
A person will become the owner of the 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 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
intends to maintain a secondary market for Units of the Trust. In so
maintaining a market, the Managing Underwriter or the Sponsor will also
realize profits or sustain losses in the amount of any difference between the
price at which Units are purchased and the price at which Units are resold
(which price includes the applicable sales charge). In addition, the Managing
Underwriter or the Sponsor will also realize profits or sustain losses
resulting from a redemption of such repurchased Units at a price above or
below the purchase price for such Units, respectively.
Public Market. Although it is not obligated to do so, the Managing Underwriter
intends to maintain a secondary 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 "Offering Price" above and "Rights of
Unitholders--Redemption of Units" ). 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. 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. Units sold prior to such time
as the entire deferred sales charge on such Units has been collected will be
assessed the amount of the remaining deferred sales charge at the time of sale.
Tax-Sheltered Retirement Plans. Units of the Trust are available for purchase
in connection with certain types of tax-sheltered retirement plans, including
Individual Retirement Accounts for individuals, Simplified Employee Pension
Plans for employees, qualified plans for self-employed individuals, and
qualified corporate pension and profit sharing plans for employees. The
purchase of Units of the Trust may be limited by the plans' provisions and
does not itself establish such plans. The minimum purchase in connection with
a tax-sheltered retirement plan is 25 Units.
RIGHTS OF UNITHOLDERS
General. 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 of 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. Other receipts (e.g., capital gains, proceeds from the sale of
Equity Securities, etc.) are credited to the Capital Account.
The Trustee will distribute any net income with respect to any of the Equity
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." Proceeds received on the sale of any
Equity Securities in the Trust, to the extent not used to meet redemptions of
Units or pay expenses, will (except as hereinafter provided) 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 Equity 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 such
Capital Account. Proceeds received on the sale of any Equity Securities in the
Trust, to the extent not used to meet redemptions of Units or pay expenses,
will, however, be distributed on the last day of each month to holders of
record on the fifteenth day of such month if the amount available for
distribution equals at least $0.01 per Unit. 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.
As of the fifteenth day of each month, the Trustee will deduct from the Income
Account and, to the extent funds are not sufficient therein, from the Capital
Account, amounts necessary to pay the expenses of the Trust (as determined on
the basis set forth under "Trust Operating Expenses" ). The Trustee
also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any governmental charges payable out of
the Trust. Amounts so withdrawn shall not be considered a part of the Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the accounts. In addition, the Trustee may withdraw from the Income
and Capital Accounts such amounts as may be necessary to cover redemptions of
Units.
Reinvestment Option. Unitholders of the Trust may elect to have each
distribution of income, capital gains and/or capital on their Units
automatically reinvested in additional Units of the Trust subject only to the
remaining deferred sales charge payments (to the extent Units may be lawfully
offered for sale in the state in which the Unitholder resides). To participate
in the reinvestment plan, a Unitholder may either contact his or her broker or
agent or file with the Trustee a written notice of election at least ten days
prior to the Record Date for which the first distribution is to apply. A
Unitholder's election to participate in the reinvestment plan will apply to
all Units of the Trust owned by such Unitholder and such election will remain
in effect until changed by the Unitholder."
Reinvestment plan distributions may be reinvested in Units already held in
inventory by the Sponsor (see "Public Offering--Public Market" ) or,
until such time as additional Units cease to be issued by the Trust (see "
The Trust" ), distributions may be reinvested in such additional Units. If
Units are unavailable in the secondary market, distributions which would
otherwise have been reinvested shall be paid in cash to the Unitholder on the
applicable Distribution Date.
Purchases of additional Units made pursuant to the reinvestment plan will be
made subject only to the remaining deferred sales charge payments on the
related Income or Capital Distribution Dates. Under the reinvestment plan, the
Trust will pay the Unitholder's distributions to the Trustee which in turn
will purchase for such Unitholder Units of the Trust and will send such
Unitholder a statement reflecting the reinvestment.
A participant may at any time prior to five days preceding the next succeeding
distribution date, by so notifying the Trustee in writing, elect to terminate
his or her reinvestment plan and receive future distributions on his or her
Units in cash. There will be no charge or other penalty for such termination.
The Sponsor shall have the right to suspend or terminate the reinvestment plan
at any time.
Reports Provided. The Trustee shall furnish Unitholders in connection with
each distribution a statement of the amount of income and the amount of other
receipts (received since the preceding distribution), if any, being
distributed, expressed in each case as a dollar amount representing the pro
rata share of each Unit outstanding. 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 Equity 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 Equity Securities held by the
Trust and the number of Units outstanding on the last business day of such
calendar year; (iv) the Redemption Price per Unit based upon the last
computation thereof made during such calendar year; and (v) amounts actually
distributed during such calendar year from the Income and Capital Accounts,
separately stated, expressed as total dollar amounts.
In order to comply with federal and state tax reporting requirements,
Unitholders will be furnished, upon request to the Trustee, evaluations of the
Securities in the Trust furnished to it by the Evaluator.
Redemption of Units. A Unitholder may redeem all or a portion of his or her
Units by tender to the Trustee at its corporate trust office at 101 Barclay
Street, 20th Floor, New York, New York 10286 of a request for redemption duly
endorsed or accompanied by proper instruments of transfer with signature
guaranteed as described above and by payment of applicable governmental
charges, if any. No redemption fee will be charged. On the third business day
following such tender the Unitholder will be entitled to receive in cash
(unless the redeeming Unitholder elects an "In Kind Distribution" as
described below) an amount for each Unit equal to the Redemption Price per
Unit next computed after receipt by the Trustee of such tender of Units as of
the Evaluation Time set forth under "Summary of Essential Financial
Information." The "date of tender" is deemed to be the date on
which Units are received by the Trustee, except that with respect to Units
received after the applicable Evaluation Time the date of tender is the next
day on which the New York Stock Exchange is open for trading and such Units
will be deemed to have been tendered to the Trustee on such day for redemption
at the redemption price computed on that day.
The Trustee is empowered to sell Equity Securities of the Trust in order to
make funds available for redemption if funds are not otherwise available in
the Capital and Income Accounts to meet redemptions. The Equity Securities to
be sold will be selected by the Trustee from those designated on a current
list provided by the Supervisor for this purpose. Units so redeemed shall be
cancelled.
Unitholders in the Trust tendering 2,500 or more Units for redemption may
request from the Trustee in lieu of a cash redemption a distribution in kind
("In Kind Distribution" ) of an amount and value of Equity Securities
per Unit equal to the Redemption Price per Unit as determined as of the next
evaluation following the tender. An In Kind Distribution on redemption of
Units will be made by the Trustee through the distribution of each of the
Equity Securities in book-entry form to the account of the Unitholder's
broker-dealer at Depository Trust Company. The tendering Unitholder will
receive his pro rata number of whole shares of each of the Equity Securities
comprising the Trust portfolio and cash from the Capital Account equal to the
fractional shares to which the tendering Unitholder is entitled. The Trustee
may adjust the number of shares of any issue of Equity Securities included in
a Unitholder's In Kind Distribution to facilitate the distribution of whole
shares, such adjustment to be made on the basis of the value of the Equity
Securities on the date of tender. If funds in the Capital Account are
insufficient to cover the required cash distribution to the tendering
Unitholder, the Trustee may sell Equity Securities according to the criteria
discussed above.
To the extent that Equity Securities are redeemed in kind or sold, the size of
the Trust will be, and the diversity of the Trust may be, reduced. Sales may
be required at a time when the Equity Securities would not otherwise be sold
and may result in lower prices than might otherwise be realized. The price
received upon redemption may be more or less than the amount paid by the
Unitholder depending on the value of the Equity Securities in the portfolio at
the time of redemption. Special federal income tax consequences will result if
a Unitholder requests an In Kind Distribution. See "Tax Status."
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. On the Initial Date of Deposit, the Public
Offering Price per Unit (which includes the sales charge) exceeded the values
at which Units could have been redeemed by the amounts shown under "
Summary of Essential Financial Information." The Redemption Price per Unit
is the pro rata share of each Unit in the Trust determined on the basis of (i)
the cash on hand in such Trust, (ii) the value of the Equity Securities in
such Trust and (iii) dividends receivable on the Equity Securities of such
Trust trading ex-dividend as of the date of computation, less (a) amounts
representing taxes or other governmental charges payable out of such Trust and
(b) the accrued expenses of such Trust. The Evaluator may determine the value
of the Equity Securities in 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 of the Trust are not so listed or, if so listed and
the principal market therefore is other than on the exchange, the evaluation
shall generally be based on the current bid price on the over-the-counter
market (unless these prices are inappropriate as a basis for evaluation). If
current bid prices are unavailable or inappropriate as a basis for valuation,
the evaluations 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 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 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 Equity 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 such Trust pursuant to the direction of the Sponsor (who
may rely on the advice of the Supervisor). Proceeds from the sale of Equity
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--General" for failed securities and as provided in
this paragraph, the acquisition by the Trust of any securities other than the
Equity Securities is prohibited.
As indicated under "Rights of Unitholders--Redemption of Units" above,
the Trustee may also sell Equity 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.
The Supervisor, in designating Equity Securities to be sold by the Trustee,
will generally make selections in order to maintain, to the extent
practicable, the proportionate relationship among the individual issues of
Equity Securities in the Trust. To the extent this is not practicable, the
composition and diversity of the Equity Securities in such Trust may be
altered. In order to obtain the best price for 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 such Trust of any Unitholder without the consent of such
Unitholder or reduce the percentage of Units required to consent to any such
amendment or waiver without the consent of all Unitholders. The Trustee shall
advise the Unitholders of any amendment promptly after execution thereof.
The Trust may be liquidated at any time by consent of Unitholders representing
66 2/3% of the Units then outstanding or by the Trustee when the value of the
Equity Securities owned by the Trust, as shown by any evaluation, is less than
that amount set forth under Minimum Termination Value in the "Summary of
Essential Financial Information." The Trust will be liquidated by the
Trustee in the event that a sufficient number of Units not yet sold are
tendered for redemption by the Managing Underwriter or the Sponsor, so that
the net worth of the Trust would be reduced to less than 40% of the value of
the Equity Securities at the time they were deposited in the Trust. If the
Trust is liquidated because of the redemption of unsold Units by the Sponsor
and/or the Managing Underwriter, the Sponsor will refund to each purchaser of
Units the entire sales charge paid by such purchaser. The Trust Agreement will
terminate upon the sale or other disposition of the last Equity Security held
thereunder, but in no event will it continue beyond the Mandatory Termination
Date stated under "Summary of Essential Financial Information."
Commencing on the Mandatory Termination Date, Equity Securities will begin to
be sold in connection with the termination of the Trust. The Sponsor will
determine the manner, timing and execution of the sales of the Equity
Securities. At least 60 days before the Mandatory Termination Date the Trustee
will provide written notice of any termination to all Unitholders of the Trust
and will include with such notice a form to enable Unitholders owning 2,500 or
more Units to request an In Kind Distribution rather than payment in cash upon
the termination of the Trust. To be effective, this request must be returned
to the Trustee at least ten business days prior to the Mandatory Termination
Date. On the Mandatory Termination Date (or on the next business day
thereafter if a holiday) the Trustee will deliver each requesting Unitholder's
pro rata number of whole shares of each of the Equity Securities in the Trust
to the account of the broker-dealer or bank designated by the Unitholder at
Depository Trust Company. The value of the Unitholder's fractional shares of
the Equity Securities will be paid in cash. Unitholders with less than 2,500
Units and Unitholders not requesting an In Kind Distribution will receive a
cash distribution from the sale of the remaining Equity Securities within a
reasonable time following the Mandatory Termination Date. Regardless of the
distribution involved, the Trustee will deduct from the funds of the Trust any
accrued costs, expenses, advances or indemnities provided by the Trust
Agreement, including estimated compensation of the Trustee, costs of
liquidation and any amounts required as a reserve to provide for payment of
any applicable taxes or other governmental charges. Any sale of Equity
Securities in 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.
The Trustee will attempt to sell Securities, in consultation with the Sponsor,
as quickly as possible commencing on the Mandatory Termination Date without in
the judgment of the Sponsor materially adversely affecting the market price of
the Securities. The Sponsor does not anticipate that the period will be longer
than one month, and it could be as short as one day, depending on the
liquidity of the Securities being sold. The liquidity of any Security depends
on the daily trading volume of the Security and the amount that the Sponsor
has available on any particular day.
It is expected (but not required) that the following guidelines will be
followed in selling the Securities; for highly liquid Securities, the
Securities will generally be sold on the Mandatory Termination Date; for less
liquid Securities, on each of the first two days subsequent to the Mandatory
Termination Date, the amount of any underlying Securities will generally be
sold at a price no less than 1/2 of one point under the closing sale price of
those Securities on the preceding day. Thereafter, the Sponsor intends that
such sales will be made without any price restrictions at least a portion of
the remaining underlying Securities, the numerator of which is one and the
denominator of which is the total number of days remaining (including that
day) in the one month period following the Mandatory Termination Date.
Within 60 days of the final distribution Unitholders will be furnished a final
distribution statement of the amount distributable. At such time as the
Trustee in its sole discretion will determine that any amounts held in reserve
are no longer necessary, it will make distribution thereof to Unitholders in
the same manner.
Limitations on Liabilities. The Sponsor, the Evaluator, the Supervisor and the
Trustee shall be under no liability to Unitholders for taking any action or
for refraining from taking any action in good faith pursuant to the Trust
Agreement, or for errors in judgment, but shall be liable only for their own
willful misfeasance, bad faith or gross negligence 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 Equity 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 Equity 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, Supervisor 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. Gruntal & Co., Incorporated is a full-service investment
bank headquartered at 14 Wall Street in New York. Established in 1880, Gruntal
has a proud history of client service, financial stability and growth. Today,
Gruntal has over 2,100 employees in 33 offices across the United States. The
scope of Gruntal's business spans a broad range of financial services
including investment banking, research, trading, asset management and
brokerage services to individuals, institutions and corporations worldwide.
Sponsor. Van Kampen American Capital Distributors, Inc., a Delaware
corporation, is the Sponsor of the Trust. Van Kampen American Capital
Distributors, Inc. is primarily owned by Clayton, Dubilier & Rice, Inc., a New
York-based private investment firm. Van Kampen American Capital Distributors,
Inc. management owns a significant minority equity position. Effective
December 20, 1994, the parent of Van Kampen Merritt Inc. acquired American
Capital Management & Research, Inc. As a result, Van Kampen Merritt Inc., has
changed its name to Van Kampen American Capital Distributors, Inc. Van Kampen
American Capital Distributors, Inc. specializes in the underwriting and
distribution of unit investment trusts and mutual funds. The Sponsor is a
member of the National Association of Securities Dealers, Inc. and has offices
at One Parkview Plaza, Oakbrook Terrace, Illinois 60181, (708) 684-6000 and
2800 Post Oak Boulevard, Houston, Texas, 77056, (713) 993-0500. It maintains a
branch office in Philadelphia and has regional representatives in Atlanta,
Dallas, Los Angeles, New York, San Francisco, Seattle and Tampa. As of
December 31, 1994 the total stockholders' equity of Van Kampen Merritt Inc.
was $117,357,000 (audited). (This paragraph relates only to the Sponsor and
not to the Trust or to the Managing Underwriter. The information is included
herein only for the purpose of informing investors as to the financial
responsibility of the Sponsor and its ability to carry out its contractual
obligations. More detailed financial information will be made available by the
Sponsor upon request.)
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 Trust as
provided therein or (iii) continue to act as Trustee without terminating the
Trust Agreement.
Trustee. The Trustee is The Bank of New York, a trust company organized under
the laws of New York. The Bank of New York has its offices at 101 Barclay
Street, New York, New York 10286 (800) 221-7668. The Bank of New York is
subject to supervision and examination by the Superintendent of Banks of the
State of New York and the Board of Governors of the Federal Reserve System,
and its deposits are insured by the Federal Deposit Insurance Corporation to
the extent permitted by law.
The duties of the Trustee are primarily ministerial in nature. It did not
participate in the selection of Equity 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 Equity 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. Tanner Propp & Farber has acted as counsel for the
Trustee.
Independent Certified Public Accountants. The statement of condition and the
related securities portfolio at the Initial Date of Deposit included in this
Prospectus have been audited by Grant Thornton LLP, independent certified
public accountants, as set forth in their report in this Prospectus, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors of Van Kampen American Capital Distributors, Inc.
and the Unitholders of Van Kampen American Capital Equity Opportunity Trust,
Series 19 (Select Technology Growth Trust, Series 1):
We have audited the accompanying statement of condition and the related
portfolio of Van Kampen American Capital Equity Opportunity Trust, Series 19
(Select Technology Growth Trust, Series 1) as of September 21, 1995. The
statement of condition and portfolio are the responsibility of the Sponsor.
Our responsibility is to express an opinion on such financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of an irrevocable letter of credit deposited
to purchase securities by correspondence with the Trustee. An audit also
includes assessing the accounting principles used and significant estimates
made by the Sponsor, as well as evaluating the overall financial statement
presentation. We believe our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Van Kampen American Capital
Equity Opportunity Trust, Series 19 (Select Technology Growth Trust, Series 1)
as of September 21, 1995, in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
Chicago, Illinois
September 21, 1995
<TABLE>
Select Technology Growth Trust
Series 1
STATEMENT OF CONDITION
As of September 21, 1995
<CAPTION>
INVESTMENT IN SECURITIES
<S> <C>
Contracts to purchase Securities <F1>................. $ 977,828
Organizational costs <F2>............................. 58,970
Total................................................. $ 1,036,798
LIABILITY AND INTEREST OF UNITHOLDERS
Liability-- ..........................................
Accrued organizational costs <F2>..................... $ 58,970
Interest of Unitholders-- ............................
Units of fractional undivided interest outstanding:...
Cost to investors <F3>................................ $ 998,000
Less: Gross underwriting commission <F3><F4>.......... 20,172
Net interest to Unitholders <F3>...................... 977,828
Total................................................. $ 1,036,798
<FN>
<F1>The aggregate value of the Equity Securities listed under "Portfolio"
herein and their cost to the Trust are the same. The value of the Equity
Securities is determined by Interactive Data Services, Inc. on the basis set
forth under "Public Offering--Offering Price." The contracts to
purchase Equity Securities are collateralized by an irrevocable letter of
credit of $977,828 which has been deposited with the Trustee.
<F2>The Trust will bear all or a portion of its organizational costs, which will
be deferred and amortized over the life of the Trust. Organizational costs
have been estimated based on a projected trust size of $20,000,000. To the
extent the Trust is larger or smaller, the estimate will vary.
<F3>The aggregate public offering price and the aggregate initial sales charge are
computed on the basis set forth under "Public Offering--Offering Price"
and "Public Offering--Sponsor and Managing Underwriter Compensation"
and assume all single transactions involve less than 5,000 Units. For single
transactions involving 5,000 or more Units, the sales charge is reduced (see
"Public Offering--General" ) resulting in an equal reduction in both
the Cost to investors and the Gross underwriting commission while the Net
interest to Unitholders remains unchanged.
<F4>Gross underwriting commission includes a deferred sales charge of $0.29 per
Unit.
</TABLE>
<TABLE>
SELECT TECHNOLOGY GROWTH TRUST, SERIES 1
PORTFOLIO (VAN KAMPEN AMERICAN CAPITAL EQUITY OPPORTUNITY TRUST, SERIES 19)
As of the Initial Date of Deposit: September 21, 1995
<CAPTION>
Estimated
Annual
Dividends Cost of
Number Market Value per Share Securities
of Shares Name of Issuer <F1> per Share <F2> <F2> to Trust <F2>
<S> <C> <C> <C> <C>
632 Adobe Systems, Inc. $ 54.500 $ 0.20 $ 34,444.00
660 Applied Materials, Inc. 104.375 0.00 68,887.50
356 Autodesk, Inc. 50.000 0.24 17,800.00
473 Cascade Communications Corporation 49.000 0.00 23,177.00
1,180 Cisco System, Inc. 72.250 0.00 85,255.00
172 Cypress Semiconductor Corporation 37.875 0.00 6,514.50
1,148 Hewlett-Packard Company 83.875 0.80 96,288.50
1,161 Informix Corporation 34.125 0.00 39,619.13
1,093 Intel Corporation 62.750 0.16 68,585.75
993 International Business Machines Corporation 95.750 1.00 95,079.75
253 LSI Logic Corporation 60.500 0.00 15,306.50
175 Lattice Semiconductor Corporation 38.750 0.00 6,781.25
160 Linear Technology Corporation 42.250 0.16 6,760.00
210 Microsoft Corporation 93.125 0.00 19,556.25
963 Motorola, Inc. 80.750 0.40 77,762.25
478 National Semiconductor Corporation 30.625 0.00 14,638.75
733 Netscape Communications Corporation 55.250 0.00 40,498.25
487 Octel Communications Corporation 40.500 0.00 19,723.50
1,899 Oracle Corporation 39.875 0.00 75,722.63
996 Seagate Technology, Inc. 45.250 0.00 45,069.00
606 Tellabs, Inc. 50.000 0.00 30,300.00
405 Teradyne, Inc. 38.125 0.00 15,440.63
834 Texas Instruments, Inc. 81.250 0.68 67,762.50
181 VLSI Technology, Inc. 37.875 0.00 6,855.38
16,248 $ 977,828.02
NOTES TO PORTFOLIO
<FN>
<F1>All of the Equity Securities are represented by "regular way"
contracts for the performance of which an irrevocable letter of credit has
been deposited with the Trustee. At the Initial Date of Deposit, the Sponsor
has assigned to the Trustee all of its right, title and interest in and to
such Equity Securities. Contracts to acquire the Equity Securities were
entered into on September 20, 1995 and are expected to settle on September 25,
1995 (see "The Trust" ).
<F2>The market value of each of the Equity Securities is based on the aggregate
underlying value of the Equity Securities acquired (generally determined by
the closing sale prices of the listed Equity Securities and the ask prices of
over-the-counter traded Equity Securities on the business day prior to the
Initial Date of Deposit). The aggregate value of the Trust, based on the
aggregate underlying value of the Equity Securities therein on the Initial
Date of Deposit, was $977,828. Estimated annual dividends are based on
annualizing the most recent quarterly or semi-annual ordinary dividends paid.
Other information regarding the Equity Securities in the Trust, as of the
Initial Date of Deposit, is as follows:
</TABLE>
<TABLE>
<CAPTION>
Cost To Profit (Loss) To
Managing Managing Aggregate Estimated
Underwriter Underwriter Annual Dividends
<S> <C> <C>
$ 978,008 $ (180) $ 3,276
</TABLE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
No person is authorized to give any information or to make any representations
not contained in this Prospectus; and any information or representation not
contained herein must not be relied upon as having been authorized by the
Trust, the Sponsor or the Managing Underwriter. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, securities
in any state to any person to whom it is not lawful to make such offer in such
state
TABLE OF CONTENTS.
<TABLE>
<CAPTION>
Title Page
<S> <C>
Summary of Essential Financial 3
Information
The Trust 6
Objective and Securities Selection 6
Trust Portfolio 8
Risk Factors 11
Tax Status 12
Trust Operating Expenses 15
Public Offering 16
Rights of Unitholders 19
Trust Administration 22
Other Matters 26
Report of Independent Certified Public 27
Accountants
Statement of Condition 28
Portfolio 29
Notes to Portfolio 30
</TABLE>
This Prospectus contains information concerning the Trust and the Sponsor, but
does not contain all of the information set forth in the registration
statements and exhibits relating thereto, which the Trust has filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933 and the Investment Company Act of 1940, and to which reference is
hereby made.
PROSPECTUS
September 21, 1995
SELECT TECHNOLOGY GROWTH TRUST, SERIES 1
Van Kampen
American Capital Equity
Opportunity Trust,Series 19
Gruntal & Co., Incorporated
14 Wall Street, 20th Floor
New York, New York 10005
1-800-223-7634
Please retain this Prospectus for future reference.
This Amendment of Registration Statement comprises the following
papers and documents:
The facing sheet
The Cross-Reference Sheet
The Prospectus
The signatures
The consents of independent public accountants and legal counsel
The following exhibits:
1.1 Copy of Trust Agreement.
3.1 Opinion and consent of counsel as to legality of securities being
registered.
3.2 Opinion of Counsel as to the Federal Income tax status of securities
being registered.
3.3 Opinion and consent of counsel as to New York tax status of
securites being registered.
4.1 Consent of Interactive Data Services, Inc.
4.2 Consent of Independent Certified Public Acountants.
4.3 Financial Data Schedule.
Signatures
The Registrant, Van Kampen American Capital Equity Opportunity
Trust, Series 19, hereby identifies Van Kampen Merritt Equity Opportunity
Trust, Series 4, Van Kampen American Capital Equity Opportunity Trust,
Series 14 and Van Kampen American Capital Equity Opportunity Trust, Series
16 for purposes of the representations required by Rule 487 and
represents the following: (1) that the portfolio securities deposited in
the series as to the securities of which this Registration Statement is
being filed do not differ materially in type or quality from those
deposited in such previous series; (2) that, except to the extent
necessary to identify the specific portfolio securities deposited in, and
to provide essential financial information for, the series with respect
to the securities of which this Registration Statement is being filed,
this Registration Statement does not contain disclosures that differ in
any material respect from those contained in the registration statements
for such previous series as to which the effective date was determined by
the Commission or the staff; and (3) that it has complied with Rule 460
under the Securities Act of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Van Kampen American Capital Equity Opportunity Trust, Series
19 has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Chicago and State of Illinois on the 21st day of September,
1995.
Van Kampen American Capital Equity
Opportunity Trust, Series 19
By Van Kampen American Capital
Distributors, Inc.
By Sandra A. Waterworth
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on September 21, 1995.
Signature Title
Don G. Powell Chairman and Chief Executive )
Officer )
William R. Rybak Senior Vice President and )
Chief Financial Officer )
Ronald A. Nyberg Director )
William R. Molinari Director )
Sandra A. Waterworth
(Attorney-in-fact*)
*An executed copy of each of the related powers of attorney was filed
with the Securities and Exchange Commission in connection with the
Registration Statement on Form S-6 of Insured Municipals Income Trust and
Investors' Quality Tax-Exempt Trust, Multi-Series 203 (File No. 33-65744)
and with the Registration Statement on Form S-6 of Insured Municipals
Income Trust, 170th Insured Multi-Series (File No. 33-55891) and the same
are hereby incorporated herein by this reference.
Exhibit 1.1
--
Van Kampen American Capital Equity Opportunity Trust
Series 19
Trust Agreement
Dated: September 21, 1995
This Trust Agreement among Van Kampen American Capital Distributors,
Inc., as Depositor, American Portfolio Evaluation Services, a division of
Van Kampen American Capital Investment Advisory Corp., as Evaluator, Van
Kampen American Capital Investment Advisory Corp., as Supervisory
Servicer, and The Bank of New York, as Trustee, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Van Kampen Merritt Equity Opportunity Trust, Series 1
and Subsequent Series, Standard Terms and Conditions of Trust, Effective
November 21, 1991" (herein called the "Standard Terms and Conditions of
Trust") and such provisions as are set forth in full and such provisions
as are incorporated by reference constitute a single instrument. All
references herein to Articles and Sections are to Articles and Sections
of the Standard Terms and Conditions of Trust.
Witnesseth That:
In consideration of the premises and of the mutual agreements herein
contained, the Depositor, Evaluator, Supervisory Servicer and Trustee
agree as follows:
Part I
Standard Terms and Conditions of Trust
Subject to the provisions of Part II hereof, all the provisions
contained in the Standard Terms and Conditions of Trust are herein
incorporated by reference in their entirety and shall be deemed to be a
part of this instrument as fully and to the same extent as though said
provisions had been set forth in full in this instrument.
Part II
Special Terms and Conditions of Trust
The following special terms and conditions are hereby agreed to:
1. The Securities defined in Section 1.01(22), listed in the
Schedule hereto, have been deposited in trust under this Trust
Agreement.
2. The fractional undivided interest in and ownership of the
Trust represented by each Unit is the amount set forth under
"Summary of Essential Financial Information - Fractional Undivided
Interest in the Trust per Unit" in the Prospectus.
3. Section 1.01(1) shall be amended to read as follows:
"(1) "Depositor" shall mean Van Kampen American Capital
Distributors, Inc. and its successors in interest, or any
successor depositor appointed as hereinafter provided."
4. Section 1.01(3) shall be amended to read as follows:
"(3) "Evaluator" shall mean American Portfolio
Evaluation Services, a division of Van Kampen American
Capital Investment Advisory Corp. and its successors in
interest, or any successor evaluator appointed as
hereinafter provided."
5. Section 1.01(4) shall be amended to read as follows:
"(4) "Supervisory Servicer" shall mean Van Kampen
American Capital Investment Advisory Corp. and its
successors in interest, or any successor portfolio
supervisor appointed as hereinafter provided."
6. Section 1.01(19) will be inapplicable for this Trust.
7. The Initial Date of Deposit for the Trust is September 21,
1995.
8. Notwithstanding anything to the contrary appearing in the
Standard Terms and Conditions of Trust, "Select Technology Growth
Trust, Series 1" will replace "Select Equity Trust."
9. The second sentence in the second paragraph of Section
3.11 shall be revised as follows: "However, should any issuance,
exchange or substitution be effected notwithstanding such rejection
or without an initial offer, any securities, cash and/or property
received shall be deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee unless the Depositor advises
the Trustee to keep such securities, cash or properties."
10. Section 8.02 is hereby revised to require an affirmative
vote of Unitholders representing 66 2/3% of the then outstanding
Units to terminate the Trust rather than the 51% indicated therein.
11. Article III of the Standard Terms and Conditions of Trust
is hereby amended by inserting the following paragraph which shall
be entitled Section 3.17.:
"Section 3.17. Deferred Sales Charge. If the prospectus
related to the Trust specifies a deferred sale charge, the
Trustee shall, on the dates specified in and as permitted
by such Prospectus, withdraw from the Income Account, an
amount per Unit specified in such Prospectus and credit
such amount to a special non-Trust account maintained at
the Trustee out of which the deferred sales charge will be
distributed to the Depositor. If the balance in the
Income Account is insufficient to make any such
withdrawal, the Trustee shall, as directed by the
Depositor, either advance funds in an amount equal to the
proposed withdrawal and be entitled to reimbursement of
such advance upon the deposit of additional monies in the
Income Account, sell Securities and credit the proceeds
thereof to such special Depositor's account or credit (if
permitted by law) Securities in kind to such special
Depositor's Account. If a Unitholder redeems Units prior
to full payment of the deferred sales charge, the Trustee
shall, if so provided in the related Prospectus, on the
Redemption Date, withhold from the Redemption Price
payable to such Unitholder an amount equal to the unpaid
portion of the deferred sales charge and distribute such
amount to such special Depositor's Account. The Depositor
may at any time instruct the Trustee in writing to
distribute to the Depositor cash or Securities previously
credited to the special Depositor's Account."
12. Section 3.01 of the Standard Terms and Conditions of Trust
shall be replaced in its entirety with the following:
"Section 3.01. Initial Costs. The following
organization and regular and recurring expenses of the
Trust shall be borne by the Trustee: (a) to the extent
not borne by the Depositor, expenses incurred in
establishing a Trust, including the cost of the initial
preparation and typesetting of the registration statement,
prospectuses (including preliminary prospectuses), the
indenture, and other documents relating to the Trust,
Securities and Exchange Commission and state blue sky
registration fees, the costs of the initial valuation of
the portfolio and audit of the Trust, the initial fees and
expenses of the Trustee, and legal and other out-of-pocket
expenses related thereto, but not including the expenses
incurred in the printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and
printing of brochures and other advertising materials and
any other selling expenses, (b) the amount specified in
Section 3.05 and Article VIII, (c) to the extent permitted
by Section 6.02, auditing fees and, to the extent not
borne by the Depositor, expenses incurred in connection
with maintaining the Trust's registration statement
current with Federal and State authorities, (d) any
Certificates issued after the Initial Date of Deposit ;
and (e) expenses of any distribution agent. The Trustee
shall be reimbursed for those organizational expenses
referred to in clause (a) as provided in the Prospectus.
13. Section 6.01(i) of the Standard Terms and Conditions of
Trust shall be amended by adding the following to the beginning of
such Section:
"Except as provided in Sections 3.01 and 3.05,"
14. Section 8.04 is hereby amended by deleting the first word
of such Section and replacing it with the following:
"Except as provided in Sections 3.01 and 3.05, the"
15. The first paragraph of Section 3.11 is hereby stricken and
replaced by the following:
"Section 3.11. Notice to Depositor. In the event that
the Trustee shall have been notified at any time of any
action to be taken or proposed to be taken with respect to
the Securities (including but not limited to the making of
any demand, direction, request, giving of any notice,
consent or waiver or the voting with respect to any
amendment or supplement to an indenture, resolution,
agreement or other instrument under or pursuant to which
the Zero Coupon Obligations have been issued) the Trustee
shall promptly notify the Depositor and shall thereupon
take such action or refrain from taking any action as the
Depositor shall in writing direct; in the absence of any
such direction the Trustee shall refrain from taking any
action."
16. Section 3.05 is hereby amended by adding the following
sub-section, Section 3.05(a)(v), immediately after Section
3.05(a)(iv):
"(v) deduct from the Income Account or to the extent funds
are not available in such Account, from the Capital
Account and pay to the Depositor the amount that it is
entitled to receive pursuant to Section 3.17."
In Witness Whereof, Van Kampen American Capital Distributors, Inc.
has caused this Trust Agreement to be executed by one of its Vice
Presidents or Assistant Vice Presidents and its corporate seal to be
hereto affixed and attested by its Secretary or one of its Vice
Presidents or Assistant Secretaries, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., and Van Kampen American Capital Investment Advisory Corp., have
each caused this Trust Indenture and Agreement to be executed by their
respective President or one of their respective Vice Presidents and the
corporate seal of each to be hereto affixed and attested to by the
Secretary, Assistant Secretary or one of their respective Vice Presidents
or Assistant Vice Presidents and The Bank of New York, has caused this
Trust Agreement to be executed by one of its Vice Presidents and its
corporate seal to be hereto affixed and attested to by one of its
Assistant Treasurers all as of the day, month and year first above
written.
Van Kampen American Capital
Distributors, Inc.
By Sandra A. Waterworth
Vice President
Attest:
By Gina M. Scumaci
Assistant Secretary
American Portfolio Evaluation
Services, a division of Van Kampen
American Capital Investment
Advisory Corp.
By Dennis J. McDonnell
President
Attest
By Scott E. Martin
Assistant Secretary
Van Kampen American Capital
Investment Advisory Corp.
By Dennis J. McDonnell
President
Attest
By Scott E. Martin
Assistant Secretary
The Bank of New York
By Jeffrey Bieselin
Vice President
Attest
By Norbert Loney
Assistant Treasurer
Schedule A to Trust Agreement
Securities Initially Deposited
in
Van Kampen American Capital Equity Opportunity Trust, Series 19
(Note: Incorporated herein and made a part hereof is the "Portfolio" as
set forth in the Prospectus.)
Exhibit 3.1
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
September 21, 1995
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
Re:Van Kampen American Capital Equity Opportunity Trust,
Series 19
Gentlemen:
We have served as counsel for Van Kampen American Capital
Distributors, Inc. as Sponsor and Depositor of Van Kampen American
Capital Equity Opportunity Trust, Series 19 (hereinafter referred to as
the "Trust"), in connection with the preparation, execution and delivery
of a Trust Agreement dated September 21, 1995, among Van Kampen American
Capital Distributors, Inc., as Depositor, American Portfolio Evaluation
Services, a division of Van Kampen American Capital Investment Advisory
Corp., as Evaluator, Van Kampen American Capital Investment Advisory
Corp., as Supervisory Servicer, and The Bank of New York, as Trustee,
pursuant to which the Depositor has delivered to and deposited the
Securities listed in the Schedule to the Trust Agreement with the Trustee
and pursuant to which the Trustee has provided to or on the order of the
Depositor documentation evidencing ownership of Units of fractional
undivided interest in and ownership of the Trust (hereinafter referred to
as the "Units"), created under said Trust Agreement.
In connection therewith we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to
enable us to express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
1. The execution and delivery of the Trust Agreement and
the execution and issuance of documentation evidencing
ownership of the Units in the Trust have been duly authorized;
and
2. The documentation evidencing ownership of the Units
in the Trust, when duly executed and delivered by the Depositor
and the Trustee in accordance with the aforementioned Trust
Agreement, will constitute valid and binding obligations of the
Trust and the Depositor in accordance with the terms thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 33-62131) relating to the Units referred
to above and to the use of our name and to the reference to our firm in
said Registration Statement and in the related Prospectus.
Respectfully submitted,
CHAPMAN AND CUTLER
MJK/cjw
Exhibit 3.2
Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
September 21, 1995
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re:Van Kampen American Capital Equity Opportunity Trust,
Series 19
Gentlemen:
We have acted as counsel for Van Kampen American Capital
Distributors, Inc., Depositor of Van Kampen American Capital Equity
Opportunity Trust, Series 19 (the "Fund"), in connection with the
issuance of Units of fractional undivided interest in the Fund, under a
Trust Agreement dated September 21, 1995 (the "Indenture") among Van
Kampen American Capital Distributors, Inc., as Depositor, American
Portfolio Evaluatoin Services, a division of Van Kampen American Capital
Investment Advisory Corp., as Evaluator, Van Kampen American Capital
Investment Advisory Corp., as Supervisory Servicer, and The Bank of New
York, as Trustee. The Fund is comprised of one separate unit investment
trust, Select Technology Growth Trust, Series 1.
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we
have deemed pertinent.
The assets of the Trust will consist of a portfolio of equity
securities (the "Equity Securities") as set forth in the Prospectus.
Based upon the foregoing and upon an investigation of such matters
of law as we consider to be applicable, we are of the opinion that, under
existing Federal income tax law:
(i) The Trust is not an association taxable as a
corporation but will be governed by the provisions of
subchapter J (relating to Trusts) of chapter 1, Internal
Revenue Code of 1986 (the "Code").
(ii) A Unitholder will be considered as owning a pro rata
share of each asset of the particular Trust in the proportion
that the number of Units held by him bears to the total number
of Units outstanding. Under subpart E, subchapter J of chapter
1 of the Code, income of a Trust will be treated as income of
each Unitholder in the proportion described, and an item of
Trust income will have the same character in the hands of a
Unitholder as it would have in the hands of the Trustee. Each
Unitholder will be considered to have received his pro rata
share of income derived from each Trust asset when such income
is received by the Trust. A Unitholder's pro rata portion of
distributions of cash or property by a corporation with respect
to an Equity Security ("dividends" as defined by Section 316 of
the Code ) are taxable as ordinary income to the extent of such
corporation's current and accumulated "earnings and profits."
A Unitholder's pro rata portion of dividends which exceed such
current and accumulated earnings and profits will first reduce
the Unitholder's tax basis in such Equity Security, and to the
extent that such dividends exceed a Unitholder's tax basis in
such Equity Security, shall be treated as gain from the sale or
exchange of property.
(iii) The price a Unitholder pays for his Units, including
sales charges, is allocated among his pro rata portion of each
Equity Security held by the Trust (in the proportion to the
fair market values thereof on the date the Unitholder purchases
his Units), in order to determine his initial cost for his pro
rata portion of the Equity Security held by the Trust.
(iv) Gain or loss will be recognized to a Unitholder upon
redemption or sale of his Units. Such gain or loss is measured
by comparing the proceeds of such redemption or sale with the
adjusted basis of his Units. Before adjustment, such basis
would normally be cost if the Unitholder had acquired his units
by purchase. Such basis will be reduced, but not below zero,
by the Unitholder's pro rata portion of dividends with respect
to each Equity Security which is not taxable as ordinary
income.
(v) If the Trustee disposes of a Trust asset (whether by
sale, exchange, redemption, payment on maturity or otherwise)
gain or loss will be recognized to the Unitholder and the
amount thereof will be measured by comparing the Unitholder's
aliquot share of the total proceeds from the transaction with
his basis for his fractional interest in the asset disposed of.
Such basis is ascertained by apportioning the tax basis for his
Units (as of the date on which his Units were acquired) among
each of the Trust assets of such Trust (as of the date on which
his Units were acquired) ratably according to their values as
of the valuation date nearest the date on which he purchased
such Units. A Unitholder's basis in his Units and of his
fractional interest in each Trust asset must be reduced, but
not below zero, by the Unitholder's pro rata portion of
dividends with respect to the Equity Security which is not
taxable as ordinary income.
Section 67 of the Code provides that certain itemized deductions,
such as investment expenses, tax return preparation fees and employee
business expenses will be deductible by individuals only to the extent
they exceed 2% of such individual's adjusted gross income. Temporary
regulations have been issued which require Unitholders to treat certain
expenses of a Trust as miscellaneous itemized deductions subject to this
limitation.
A Unitholder will recognize taxable gain (or loss) when all or part
of the pro rata interest in an Equity Security is either sold by the
Trust or redeemed or when a Unitholder disposes of his Units in a taxable
transaction, in each case for an amount greater (or less) than his tax
basis therefor.
Any gain recognized on a sale or exchange will, under current law,
generally be capital gain or loss.
The scope of this opinion is expressly limited to the matters set
forth herein, and, except as expressly set forth above, we express no
opinion with respect to any other taxes, including foreign, state or
local taxes or collateral tax consequences with respect to the purchase,
ownership and disposition of Units.
Very truly yours
Chapman and Cutler
MJK/cjw
Exhibit 3.3
Tanner Propp & Farber
99 Park Avenue
New York, New York 10016
September 21, 1995
Van Kampen American Capital Equity
Opportunity Trust, Series 19
c/o The Bank of New York,
As Trustee
101 Barclay Street, 17 West
New York, New York 10286
Dear Sirs:
We have acted as special counsel for the Van Kampen American Capital
Equity Opportunity Trust, Series 19 (the "Fund") consisting of Select
Technology Growth Trust, Series 1 (individually a "Trust") for the
purposes of determining the applicability of certain New York taxes under
the circumstances hereinafter described.
The Fund is created pursuant to a Trust Agreement (the
"Indenture"), dated as of today (the "Date of Deposit") among Van Kampen
American Capital Distributors, Inc. (the "Depositor"), American Portfolio
Evaluation Services, a division of a subsidiary of Depositor, as
Evaluator and Supervisor, and The Bank of New York, as Trustee (the
"Trustee"). As described in the prospectus relating to the Fund dated
today to be filed as an amendment to a registration statement heretofore
filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Prospectus") (File Number 33-62131), the
objectives of the Fund are to provide the potential for long term capital
appreciation and income through investment in shares of U.S. based multi-
national companies in the high technology industry. It is noted that no
opinion is expressed herein with regard to the Federal tax aspects of the
securities, units of the Trust (the "Units"), or any interest, gains or
losses in respect thereof.
As more fully set forth in the Indenture and in the Prospectus, the
activities of the Trustee will include the following:
On the Date of Deposit, the Depositor will deposit with the Trustee
with respect to each Trust the securities and/or contracts and cash for
the purchase thereof together with an irrevocable letter of credit in the
amount required for the purchase price of the securities comprising the
corpus of the Trust as more fully set forth in the Prospectus.
The Trustee did not participate in the selection of the securities
to be deposited in the Trust, and, upon the receipt thereof, will deliver
to the Depositor a registered certificate for the number of Units
representing the entire capital of the Trust as more fully set forth in
the Prospectus. The Units, which are represented by certificates
("Certificates"), will be offered to the public upon the effectiveness of
the Registration Statement.
The duties of the Trustee, which are ministerial in nature, will
consist primarily of crediting the appropriate accounts with cash
dividends received by the Fund and with the proceeds from the disposition
of securities held in the Fund and the proceeds of the treasury
obligation on maturity and the distribution of such cash dividends and
proceeds to the Unitholders. The Trustee will also maintain records of
the registered holders of Certificates representing an interest in the
Fund and administer the redemption of Units by such Certificateholders
and may perform certain administrative functions with respect to an
automatic investment option.
Generally, equity securities held in the Trust may be removed
therefrom by the Trustee at the direction of the Depositor upon the
occurrence of certain specified events which adversely affect the sound
investment character of the Fund, such as default by the issuer in
payment of declared dividends or of interest or principal on one or more
of its debt obligations..
Prior to the termination of the Fund, the Trustee is empowered to
sell equity securities designated by the Supervisor only for the purpose
of redeeming Units tendered to it and of paying expenses for which funds
are not available. The Trustee does not have the power to vary the
investment of any Unit holder in the Fund, and under no circumstances may
the proceeds of sale of any equity securities held by the Fund be used to
purchase new equity securities to be held therein.
Article 9-A of the New York Tax Law imposes a franchise tax on
business corporations, and, for purposes of that Article, Section 208(l)
defines the term "corporation" to include, among other things, "any
business conducted by a trustee or trustees wherein interest or ownership
is evidenced by certificate or other written instrument."
The Regulations promulgated under Section 208 provide as follows:
A business conducted by a trustee or trustees in
which interest or ownership is evidenced by
certificate or other written instrument. includes,
but is not limited to, an association commonly
referred to as a "business trust" or "Massachusetts
trust". In determining whether a trustee or trustees
are conducting a business, the form of the agreement
is of significance but is not controlling. The
actual activities of the trustee or trustees, not
their purposes and powers, will be regarded as
decisive factors in determining whether a trust is
subject to tax under Article 9-A. The mere
investment of funds and the collection of income
therefrom, with incidental replacement of securities
and reinvestment of funds, does not constitute the
conduct of a business in the case of a business
conducted by the trustee or trustees. 20 NYCRR 1-
2.3(b)(2) (July 11, 1990).
New York cases dealing with the question of whether a trust will be
subject to the franchise tax have also delineated the general rule that
where a trustee merely invests funds and collects and distributes the
income therefrom, the trust is not engaged in business and is not subject
to the franchise tax. Burrell v. Lynch, 274 A.D. 347, 84 N.Y.S.2d 171
(3rd Dept. 1948), order resettled, 274 A.D. 1073, 85 N.Y.S.2d 705 (1949).
An opinion of the Attorney General of the State of New York, 47 N.Y.
Atty. Gen. Rep. 213 (Nov. 24, 1942), it was held that where the trustee
of an unincorporated investment trust was without authority to reinvest
amounts received upon the sales of securities and could dispose of
securities making up the trust only upon the happening of certain
specified events or the existence of certain specified conditions, the
trust was not subject to the franchise tax.
In the instant situation, the Trustee is not empowered to sell
obligations contained in the corpus of the Fund and reinvest the proceeds
therefrom. Further, the power to sell such obligations is limited to
circumstances in which the creditworthiness or soundness of the issuer of
such equity security is in question or in which cash is needed to pay
redeeming Unit holders or to pay expenses, or where the Fund is
liquidated pursuant to the termination of the Indenture. In substance,
the Trustee will merely collect and distribute income and will not
reinvest any income or proceeds, and the Trustee has no power to vary the
investment of any Unit holder in a Trust.
Under Subpart E of Part I, Subchapter J of Chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), the grantor of a trust
will be deemed to be the owner of the trust under certain circumstances,
and therefore taxable on his proportionate interest in the income
thereof. Where this Federal tax rule applies, the income attributed to
the grantor will also be income to him for New York income tax purposes.
See TSB-M-78(9)(c), New York Department of Taxation and Finance June 23,
1978.
By letter, dated today, Messrs. Chapman and Cutler, counsel for the
Depositor, rendered their opinion that each Unit holder will be
considered as owning a share of each asset of a Trust in the proportion
that the number of Units held by such holder bears to the total number of
Units outstanding and the income of a Trust will be treated as the income
of each Unit holder in said proportion pursuant to Subpart E of Part 1,
subchapter J of Chapter 1 of the Code.
Based on the foregoing and on the opinion of Messrs. Chapman and
Cutler, counsel for the Depositor, dated today, upon which we
specifically rely, we are of the opinion that under existing laws,
rulings and court decisions interpreting the laws of the State and City
of New York.
1. Each Trust will not constitute an association taxable as a
corporation under New York law and, accordingly, will not be subject to
tax on its income under the New York State franchise tax or the New York
City general corporation tax.
2. The income of the Trust will be treated as the income of the
Unit holders under the income tax laws of the State and City of New York,
and
3. Unit holders who are not residents of the State of New York are
not subject to the income tax laws thereof with respect to any interest
or gain derived from the Fund or any gain from the sale or other
disposition of the Units, except to the extent that such interest or gain
is from property employed in a business trade profession or occupation
carried on in the State of New York.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Units and to the use of our name
and the reference to our firm in the Registration Statement and in the
Prospectus.
Very truly yours,
Tanner Propp & Farber
MNS:ac
Exhibit 4.1
Interactive Data
14 West Street
New York, NY 10005
September 20, 1995
Van Kampen American Capital Distributors, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Re: Van Kampen American Capital Select Technology
Growth Trust, Series 1
(A Unit Investment Trust) Registered Under the Securities
Act of 1933, File No. 33-62131
Gentlemen:
We have examined the Registration Statement for the above captioned
Fund.
We hereby consent to the reference in the Prospectus and Registration
Statement for the above captioned Fund to Interactive Data Services, Inc.,
as the Evaluator, and to the use of the Obligations prepared by us which
are referred to in such Prospectus and Statement.
You are authorized to file copies of this letter with the Securities
and Exchange Commission.
Very truly yours,
James Perry
Vice President
Exhibit 4.2
Independent Certified Public Accountants' Consent
We have issued our report dated September 21, 1995 on the statement
of condition and related securities portfolio of Van Kampen American
Capital Equity Opportunity Trust, Series 19 as of September 21, 1995
contained in the Registration Statement on Form S-6 and Prospectus. We
consent to the use of our report in the Registration Statement and
Prospectus and to the use of our name as it appears under the caption
"Other Matters-Independent Certified Public Accountants.'"
Grant Thornton LLP
Chicago, Illinois
September 21, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This report reflects the current period taken from 487 on September 21, 1995 it
is unaudited
</LEGEND>
<SERIES>
<NUMBER> 19
<NAME> Van Kampen American Capital Equity Opportunity Trust
<CAPTION>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> SEP-21-1995
<PERIOD-END> SEP-21-1995
<INVESTMENTS-AT-COST> 977828
<INVESTMENTS-AT-VALUE> 977828
<RECEIVABLES> 58970
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1036798
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58970
<TOTAL-LIABILITIES> 58970
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 977828
<SHARES-COMMON-STOCK> 100000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 977828
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
